sale of property at a loss (previously ppr)

sale of property at a loss (previously ppr)

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house sold at a loss of £120k.  it was ppr for 6 years and then let for 4 years.

how much of the loss is allowable ?

or is a valuatoin required at end of year 6 to establish the position?

Replies (8)

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By Steve Kesby
24th Jan 2014 15:46

1/10th

TCGA 1992, s 16 refers.

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By blok
24th Jan 2014 15:49

.

so, does the last 36 months automatically attach to exempt the gain/loss?

what about the logic (if any) that the asset was introduced into a letting business at the end of year 6 at OMV?

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By blok
24th Jan 2014 15:50

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i.e. what if it was sold after year 8?

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By Steve Kesby
24th Jan 2014 15:58

"Yes" and "what logic?"

You calculate the loss as you would a gain. So when you dip into s 223 the length or the period of occupation is 6 years actual, plus 3 years deemed.

Your logic works for the purposes of whether the proprietor has any capital in his business that he can withdraw, but CGT works on disposals and, as a general premise, you can't dispose of something to yourself (except when you appropriate it to trading stock!).

I assume it's already been done and can't be delayed until after 5 April?

EDIT: If it was sold at the end of year 8 there wouldn't be an alowable loss. 6 years actual, plus 2 years deemed.

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By blok
24th Jan 2014 16:17

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yes.  i confused myself.  i was thinking about a transfer to trading stock where for example it was going to be developed before a sale by the owner.

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By RetiredTax
25th Jan 2014 11:37

CGT on PPR property

Steve, a slight diversion here from the original question, but, you mention the possibility of an arising CGT on a transfer of land/property to "trading stock". I seem to recall that there are rules (e.g. where someone develops part of their PPR garden and then sells off the new property) that deems the transfer of the land to be at OMV for the CGT (if any) and then uses that value for the cost of the land  in the calculation of the eventual profit. I can't immediately find the relevant legislation and/or HMRC guidance on this. With your usual efficiency could you possibly point me in the right direction please?

Thanks in advance

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By Steve Kesby
26th Jan 2014 14:52

@ RetiredTax

I think the link you seek is CG69200.

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By RetiredTax
26th Jan 2014 17:49

CGT
Thanks Steve, that's very helpful

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