We exchanged contracts for the property on 6/4/1988, moved out in June 1994
I'm assuming that the flats have been more or less continuously let since you moved out of the building.
If the values of the flats are manipulated artificially and HMRC find out, they won't be best pleased. They do look at property transactions closely and sometimes ask the District Valuer to carry out their own valuations.Given that the lower flat was your main home, you will automatically qualify for the gain for the last 18 months of ownership to be treated as exempt from CGT so there would seem to be little point in moving back in. The following figures are for each of you assuming you don't move back into the lower flat:LOWER FLAT SOLD FOR £192,000 SEPTEMBER 2015Total period of ownership 330 monthsGain £66,000 (£192,000 - £60,000 / 2 )Exempt Gain £18,600 (£66,000 / 330 x 93)Non-exempt gain £47,400 (£66,000 / 330 x 237)Letting relief £18,600 (lesser of £40,000, £18,600 and £47,400)Taxable gain £28,800 (£47,400 - £18,600 letting relief)UPPER FLAT SOLD FOR £128,000 SEPTEMBER 2015Gain £44,000 (£128,000 - £40,000 / 2)Taxable gain £44,000SUMMARYYou each have taxable gains of £72,800 (£28,800 + £44,000). The first £11,100 of gains you make in 2015/16 will be tax free so you will each be left with net taxable gains of £61,700. There are two rates of CGT, 18% and 28%. The rate or combination of rates that you will pay will be dependent on the level of your income in 2015/16 assuming that is when the flats are sold.Of the basic rate tax band which is £31,785, £20,385 of yours will be used to tax £20,385 of your net taxable gain. The balance of your net taxable gain of £41,315 will be taxed at 28%.Of the basic rate tax band which is £31,785, £31,785 of your partner's will be used to tax £31,785 of their net taxable gain assuming they have no income in excess of the personal allowance in 2015/16. The balance of their net taxable gain of £29,915 will be taxed at 28%.You could move into the upper flat for a period (I'd say a year at least) and then claim relief from CGT for the last 18 months of ownership and some letting relief to reduce the gain on that property. However, if HMRC thought that the last 18 months relief and letting relief were your motivation for moving back in, they could deny you those reliefs.Take a look at HS283 for more information on the main residence and CGT.
I hope this helps but let me know if you have any further questions.