Prop swap

Mr and Mrs A both in their early sixties acquired a property (No 1) in October 2000 at a cost of £90 000 in which they then resided. One month later they acquired the property next door (No 2) for £28 000 which they improved over the next six months at a further cost of £20 000.

In March 2001 the couple had a trial separation. Mrs A moved into No 2 Mr A remained in No 1. Neither viewed this as permanent and in May 2005 Mrs A moved back into No  I and the couple have continued to reside there together up until the present date. No 2 remained empty until May 2006 when it was contracted out to letting agents for holiday letting.

In September 2004 the couple decided that Mr A would transfer his...