Private Residence Relief - Second Property for married couple.

[HomeX2]

Hello,

I would be very grateful if I could get some advice on Capital Gains Tax; specifically regarding the private residence relief for more than one property. I apologise in advance for the length of the post, but the situation is a bit complicated!

- My wife and I married in June 2003 and bought our first property together (P1) as joint tenants in October 2003. For about 6 months or so, P1 was my wife’s main place of residence, though she did spend a few days a week at her widowed mother’s property (P2) and commuted to work from there.

- My wife’s mother had been diagnosed with cancer prior to our marriage and from 2004 onward her illness took a turn for the worse. My wife had to spend more and more time with her and lived at P2 regularly until her mother's death in 2012. During the period in question (2004-2012), my wife would have regarded P2 are her main place of residence (for example, she spent much more time there per week than at P1, re-registered at her old medical practice and arranged for all her correspondence to be sent to P2).

- In 2012 my wife’s mother died and my wife inherited P2 with her name only on the title deeds. She has continued to live at P2 for a majority of time. However for PRR purposes, she did not nominate either P1 or P2 as her main place of residence as she (and I) were simply unaware of being able to do so.

- For the period 2003 to the present I have lived continuously at P1.

- Both my wife and I no longer work and have taken early retirement. We do not pay income tax.

- We now plan to sell P2 in 2019 and possibly P1 the year after.

I understand that for PRR, a married couple can only have one residence at any one time. How would the PRR rules apply in our case and could anyone give an example of how CGT might be calculated on the sale of both properties?

Many thanks.