We have no mortgage on our house. My daughter and her family have recently moved in due to their landlord selling up. My wife wants to sell her half of the house to my daughter and use the proceeds to buy another property so she can move out, leaving me in this house living with my daughter and her family. My daughter and her partner both work full-time and have mortgage approval for roughly half the value of this property. I run my own business, and my wife works part-time for the NHS.  

Arthur Weller replies:  

You can certainly do as you suggest. Your wife should have no capital gains tax (CGT) to pay on the sale of her half of the house due to principal private residence (PPR) relief. I am not certain whether you are separating from your wife, and therefore are considered to be not 'living together' – see the definition in HMRC’s Capital Gains Manual at CG22070. The fact that you are going to live in separate houses does not necessarily mean that you are not 'living together'. If you are classified as 'living together', then between the two of you it is only possible to have one PPR. But if you are separating, then each one of you can have their own PPR; see CG65300.