Complicated house situation, could anyone advise?

[MyGastIsFlabbered]

My living arrangements are a bit complicated so I'm just trying to find out more information.

We live in House A which is owned 50/50 between DH and his brother. His brother lives in House B which is also owned 50/50 between him and DH. Their father used to own 50% of House B but gifted his share to DH and BIL in the past couple of years.

The long term plan was for DH and BIL to effectively 'swap' the 50% equity in the 2 houses so that DH owns all of House A and BIL owns all of House B. My PIL have been reluctant to do this as they say that if House A and House B are of different values then there will be tax payable on the swap. Is this so, as I didn't think CGT or IT were payable on main residences. (House A was inherited by DH and BIL years ago). PIL are trying to avoid this by finding a surveyor who will effectively value both houses the same so the swaps are of equal value.

Please could someone help?

The arrangement is one of the worst ones they could have set up, tax wise.

On the transfer of the 50% CGT will be payable on the notional increase in value. You can only claim principle private residence relief for the home where you live, not for the home where your brother lives.

The equities haven't been swapped as yet, we're still waiting for valuations on the properties to be done. Is there another way to do it that is more tax efficient?

You could transfer half (i.e. 25% share) of the non-resident interest to the owner's spouse first to make full use of 2 annual exemptions and 2 lower rate tax bands. You really need to speak to an accountant.