Loss on sale of let property - also PPR

Loss on sale of let property - also PPR

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Property acquired in November 2006 and let out until April 2008. (17 months)

Became PPR from April 2008 to June 2011. (38 months)

Let again from June 2011 to June 2012 when sold. (13 months)

A loss arises on disposal (after taking into account all legal fees/stamp duty etc) of £96K.

I believe I can have a CGT loss for the non-PPR period, just as a gain would be chargeable.  Now, if there was a gain, then the PPR exemption would also cover the last 3 years of ownership so only the first 17 months would be chargeable (subject to lettings relief etc).  But as we are not exempting a gain here (because there is no gain), can I have a CGT loss equivalent to 30 months (17+13)?

Replies (7)

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By johngroganjga
12th Jun 2013 16:09

I may stand to be corrected but my first reaction is that the last 36 months rule works by treating the last 3 years of ownership as a period of residence, regardless of actual residence, and therefore that will be the case irrespective of whether what is being reduced is a taxable gain or an allowable loss.

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By Swedish Chef
12th Jun 2013 16:22

From what I can see....

... the section of the legislation that deals with the 36 month rule is s.223, which refers to gains chargeable under s.222. 

But there is no gain chargeable under s.222, so my inital thought is that this section does not apply.

Otherwise, I would agree.

Hmm....thoughts, anyone?

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By Steve Kesby
12th Jun 2013 16:27

I agree with John

I think you need to read sections 223(1) and 223(2) in the context of S.16(2).

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By Swedish Chef
12th Jun 2013 16:51

I think I get it.

So let me get this right -  where a property has been a main residence, the last 36 months is also treated as a period of residence IN ANY EVENT.  This is why s.223 increases the exempt amount.

And as s.16(2) says where you read 'gains', also read 'losses' (that's the bit I didn't appreciate) - so in other words, only the first 17 months is allowable as a loss.

Correct?

 

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By Steve Kesby
12th Jun 2013 17:02

Yes

You calculate the exempt (or more correctly non-chargeable) loss exactly as you would calculate the exempt gain.

The lettings extension doesn't then apply though because 223(4) starts with the words where a gain arises (with no "chargeable" qualification), not to mention the fact that it would become silly.

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By Swedish Chef
12th Jun 2013 17:03

Excellent

Thanks to both of you.

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By Martin B
13th Jun 2013 10:22

Loss on sale of property-ppr

flagging

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