Hi
We acquired a UK commercial property through an LLP in 2004. The property value has fallen and we would like to know whether the unrealised loss can be taken to the P&L, and whether this would reduce the tax payable by the individual partners i.e. is an unrealised loss allowable for tax purposes.
Thank you in advance.
Regards
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Replies (2)
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Quite simply - no (on the tax side, anyway)
An unrealised capital loss may be recognised where the value of the asset has become negligible. But I assume that is not the case here?
The fall in value may of course be taken to the P&L - you just won't get a deduction for it.
Impairment
The fall in value of the asset may be an indication of impairment and could be charged to the P&L (may be some revaluation reserve issues) but in summary as the previous respondent stated, this is not tax deductable.
As you are calling this asset an "investment", it may be worth reviewing the overall tax position as there may be some longer term CGT issues when the business is disposed of. I would recommend speaking to a tax professional