Thank you for your reply..
As the property was your father-in-law's main residence for most of the period of ownership, he would claim private residence relief for the period the property remained his main residence. He would also claim additional relief for the last 18 months of ownership as the property being transferred was his main residence at some point during the periodd of ownership.
Finally, he would be able to claim letting relief for the period the property was let and this relief has a maximum limit of £40k.
Period of ownership from Apr 1982 to Jun 2016 is some 411 mths and period let is 79 mths. Based on this period covered for private residence relief is 350 mths. gain covered by PRR is (220,000-38,000) = 182,000 x (350/411) = 155,000. gain not covered by PRR is £27,000 and this would be covered by letting relief.
There is no CGT payable on transfer of property to your wife. You should nevertheless report the gain on his tax return 2017 and claim reliefs as outlined.
Now coming to your father's property that is jointly owned by you and him. The fact he still lives in the proeprty and is not paying any rent for the 50% he does not own, the gift of 50% is deemed "gift with reservation" and the gift will still be included as part of his estate for IHT purposes.
More information on this can be found here under Gifts with strings attached
and here under giving away a home before you die
I hope this is helpful and answers your question.
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