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He made a gift with reservation (he continued to live it) so for IHT purposes they treat it as though the transfer didn’t take place. They look on it as a sham transfer done to avoid IHT (which is what it was.).
IHT is payable on the estate value, not the house itself ,. The house is just part of it.
If you don’t sell the house ever or sell at acquisition value, you pay no CGT.
It isn’t double taxation because you only pay CGT on the gain which hasn’t already been taxed. It is extra money that you get taxed on…the gain
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