MP for Epping Forest Eleanor Laing sold her second home for a £1m profit - while avoiding a £180,000 capital gains tax bill by claiming it was her main home.
The shadow junior justice minister sold her Westminster flats for £1.8m last year - after purchasing them in 1993 for around £300,000.
She claimed more than £80,000 towards mortgage interest and service charges on the home.
She then brought a neighbouring flat in 2003 for £465,000 and converted them into one property.
It is understood that Mrs Laing also claimed the flats were her second home with regard to expenses, but when she sold the property she nominated the flats as her primary residence, meaning she avoided the £180,000 bill.
Mrs Laing had already faced criticism for use of a second home, as her first home in Theydon Bois is less tham an hour from Westminster.
Before her expenses claims were exposed, Mrs Laing told an Epping community webiste: "Some of the revelations in the press over the last few weeks have been appalling and I am profoundly upset at what has been happening.
"An MP is a public servant and as such has a responsibility for spending taxpayers’ money.
"Public servants must be accountable, open and honest".
She is the latest to fall foul of the expenses row, which has already claimed the political careers of several MPs.
Mrs Laing, who denies any wrongdoing, told the Daily Telegraph: “When I sold the flat I took advice from my solicitors on whether capital gains tax was due. I also consulted the HM Revenues and Customs (HMRC) publication which is issued to all MPs."
"I realised, on investigating the rules, that it would be wrong... to pay capital gains tax on the flat because, although I had always regarded the flat as my second home, my main home being in my constituency, the definition of principal private residence for capital gains tax purposes is not a matter of choice but a matter of fact."
“As a matter of fact, under HMRC rules, the flat was my principal private residence. I will, of course, be liable to pay capital gains tax when I eventually sell my house in Theydon Bois as, under HMRC rules, it is defined as my second home.”
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