Three properties

We have a client who has a problem concerning capital gains tax relating to a main residence. Property A was purchased in May 1999 property B was purchased in June 1999 and property C in May 2002.

Property A was occupied as a main residence until it was sold in August 2005. Prior to that an election under TCGA 1992 s 222 was made for property B to be regarded as the main residence with effect from 1 May 2002.

No capital gains tax was paid on the disposal of property A as it was also let for a period of time and the taxable part of the gain relating to the non-main residence period was covered by the residential lettings exemption.

Both properties B and C have increased in value by just over £2 million each and the capital...