Will in-laws have to pay capital gains tax?

A question about : Will in-laws have to pay capital gains tax?

Hi,

The inlaws are going to build a house in their garden and move into it and sell their existing house (all the relevant permissions are in place). They have an existing Ј30k interest only mortgage.

The plan is for them to borrow about Ј110k (Ј30k to clear mortgage and Ј80k build costs) and pay it back when they sell their existing house. As they don't earn a lot and are in their early 60's they have been advised (by an IFA) do go for a self-cert remortgage with me as their guarantor.

Question is will they be liable for capital gains tax? I would not have thought so as they are selling their main residence to clear the debt (live their for 20+ years).

If there is any cash left over they want to split it 50-50 between themselves and me/my wife (their daughter).

Would i be liable to pay any tax on this cash? (we are talking about Ј20k max.)

Thanks
Simon

Best answers:

• They won't have to pay CGT as it is not due on our main residence.
  You won't have to pay any tax on the gift as long as they don't die within 7 years.
  If they die within 7 years then Inheritance tax will be due on the gift on a sliding scale (depending on when in the 7 years they die - it decreases over time).
  If you want to be really careful then make sure the gift is from the one with the longest life expectancy (which is probably the female of the species).
• Thanks for the advice, that will please them