Bungalow bill

Thirty years ago I bought a bungalow in the country for the impending retirement of my wife and myself. Circumstances changed and we decided to use it as holiday home.

Subsequently the property was gifted to my wife who has let it as a furnished holiday letting achieving lets of between ten and 14 weeks each year until 5 April 2012.

We have recently decided to sell the bungalow but so far there has been little interest despite price reductions.

It was let for two weeks this spring but no further bookings are envisaged. We have one child who has been non-resident for many years and all three of us are higher-rate taxpayers.

I would welcome advice on whether my wife should make the ‘period of grace’ election (to treat the property as qualifying for the furnished property letting rules) and also on the...