Thank you for your reply.
You say your parents are happy to gift you their 50% share of the property they live in and you own the other 50%.
As this is their main residence and only property, any gain they make on transfer of share would be exempt from capital gains tax as it is covered in full by private residence relief. For CGT purposes, the value of the gift would be based on the current market value of the property and not the cost when it was first purchased.
It is clear from your postings that they would move into the detached annex to the new property that would be built in the grounds of the current property.
You should be mindful of the fact that this gift is deemed a potentially exempt transfer for inheritance tax purposes and the seven year rule would apply to the gift. If there were to survive for 7 full years from the date of gift then the gift is out of scope of IHT.
More information on this can be found here
You as a recipient of the gift would receive it tax free as there is no taxation on gifts in the UK.
I hope this is helpful and answers your question.
If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.