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Can you offset your earnings from capital gains

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I rented out two properties, and sold them both last year.  As the business never made a profit last year can I offset my personal allowance against the capital gains I earnt?

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By Tim Vane
01st Jul 2019 00:31

1. You can’t “earn” Capital Gains
2. The Personal Allowance is for income tax
3. There is a separate exemption for Capital Gains.

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RLI
By lionofludesch
01st Jul 2019 09:36

[sigh] ©

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By atleastisoundknowledgable...
01st Jul 2019 09:46

No, although the CG threshold may be an option.

Out of curiosity, is ‘never made a profit last year’ the same as ‘made a loss’? Devil is in the detail ...

I presume that the ‘business’ you mention is either a sole-trader or unincorporated partnership business, separate from your rental properties? Whilst it’s possible, I would surmise (on the assumption that you don’t have an accountant) unlikely that your rental properties are a ‘business’ for tax purposes. Tax IS taxing.

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Replying to atleastisoundknowledgable...:
RLI
By lionofludesch
01st Jul 2019 09:57

atleastisoundknowledgable... wrote:

Out of curiosity, is ‘never made a profit last year’ the same as ‘made a loss’?

"Never" and "Didn't" are considered synonymous in some areas of England. Particularly West Lancashire.

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Replying to lionofludesch:
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By atleastisoundknowledgable...
01st Jul 2019 10:02

Ah, but tax is definitive, not open to local colloquiums.

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Replying to atleastisoundknowledgable...:
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By Tax Dragon
01st Jul 2019 10:38

I think you mean colloquialisms.

I would also have thought from the OP that "the business" was the rental one. If not, yours is a good question. The range of interpretations (to what is surely one of the simplest questions ever asked) shows yet again (as if further evidence were needed) that, whilst this forum might usefully discuss technical issues, it's no place to gain advice.

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By atleastisoundknowledgable...
01st Jul 2019 11:16

“I would also have thought from the OP that "the business" was the rental one”

I agree, it is a fair assumption, which we all made. I was just trying to sound clever and make the point.

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By Vile Nortin Naipaan
01st Jul 2019 10:42

Yes. That's fine.

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Replying to Vile Nortin Naipaan:
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By SXGuy
01st Jul 2019 11:34

Is it?

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By Tax Dragon
01st Jul 2019 11:47

SXGuy, ask yourself how the OP might try to make the claim.

If it is a claim.

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By Vile Nortin Naipaan
02nd Jul 2019 15:58

Yes. There's a special rule that applies to the OP.

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By TTd
02nd Jul 2019 12:32

Two houses were purchased in order to rent them out - that was the business. When the houses were sold (both last year) the business made a loss (as we had no-one renting and had to do alot of work to get them into a sellable state - decorating etc. ) Can we use any of the capital gains to offset this loss? Or is Capital Gains entirely separate?

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Replying to TTd:
By Duggimon
02nd Jul 2019 16:25

Perhaps, given that you don't appear to know what a business is, you need to consult an accountant to help you?

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Replying to TTd:
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By Tax Dragon
02nd Jul 2019 17:28

Take an accountant's advice and seek the advice of an accountant.

The question you ask really is not the only issue in the scenario you describe.

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Replying to TTd:
RLI
By lionofludesch
02nd Jul 2019 17:33

TTd wrote:
Or is Capital Gains entirely separate?

The clue is in it having a completely different name.

Just saying, like.

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Replying to lionofludesch:
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By Tax Dragon
02nd Jul 2019 18:38

That's super-simplistic. It's not like you to be so antihelpful.

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Replying to Tax Dragon:
RLI
By lionofludesch
02nd Jul 2019 18:45

OK - it's got a different name. It's a different tax.

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Replying to lionofludesch:
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By Tax Dragon
03rd Jul 2019 09:16

Hi Lion, sorry I didn't get back to you last night – I had some Dragonesses to cheer on.

It is a different tax. But it has a fairly symbiotic relationship with income tax. Huge numbers of transactions are within the scope of both. Sometimes losses for one tax can be relieved against the other.

Just saying, like.

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Replying to Tax Dragon:
RLI
By lionofludesch
03rd Jul 2019 09:22

Tax Dragon wrote:

Hi Lion, sorry I didn't get back to you last night – I had some Dragonesses to cheer on.

Wales were playing, were they ?

Point taken.

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Replying to lionofludesch:
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By Tax Dragon
03rd Jul 2019 10:12

England and Wales have a fairly symbiotic relationship. I like to think we (are allowed to) support each other's teams.

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Replying to TTd:
By JCresswellTax
13th Sep 2019 09:50

TTd wrote:

Two houses were purchased in order to rent them out - that was the business. When the houses were sold (both last year) the business made a loss (as we had no-one renting and had to do alot of work to get them into a sellable state - decorating etc. ) Can we use any of the capital gains to offset this loss? Or is Capital Gains entirely separate?

So you have set the costs of getting the properties into a 'sellable state' against the rental income you have received? During a period where you weren't actually renting them out and had made the decision to sell them?

Jesus Christ.

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By Justin Bryant
12th Sep 2019 11:30

There may be a very long shot argument that if you spent £11k worth of work (in terms of the value of your time) on improving the properties and you effectively get the PA that way via the £11k uplift on your CGT base cost. I once saw that possibility mentioned in a case. I forget which one.

[Edit] The case is Oram (H.M. Inspector of Taxes) v Johnson(1) (1975-1981) 53 TC 319.

HMRC seem to disagree though. See https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg15210

I see HMRC are right here: https://library.croneri.co.uk/cch_uk/btc/53-tc-319

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Replying to Justin Bryant:
Psycho
By Wilson Philips
12th Sep 2019 16:42

Eh? The decision was the opposite - you really do have comprehension difficulties.

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Replying to Wilson Philips:
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By Justin Bryant
13th Sep 2019 09:45

Eh? That's precisely what I say above (you have reading difficulties)! (To explain to a dummy like you, the lower court decided as I originally thought (being reversed on appeal), hence the initial thought.)

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Replying to Justin Bryant:
Psycho
By Wilson Philips
13th Sep 2019 11:14

The problem is the manner in which you edit your comments. You offer the OP a glimmer of hope, citing a 'relevant' case. The problem is that the citation refers to the decision in the appeal which renders your advice null and void. You would have been better to completely retract your initial comments, or otherwise amend your post. But that would have required you to admit that you had made a mistake, which as we all know you will never do.

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By Tax Dragon
13th Sep 2019 10:33

The confusion comes from building a comment up through edits. Just watch as I do that with this comment.

Read as a single comment, Justin's comment makes no sense because he contradicts himself. Read as a series of developing thoughts, you can make sense of it. You just need to know which bit is original comment, which bit is added later, and which bit is added after that.

I might appear mad when I reply to myself (like on the fuel thread) - but it avoids this confusion (well, I hope it does :-))... because you can see what's added when.

Edit 3: oh and another really annoying thing about edits is that, because they don't trigger notifications, you only know they've been made if you read the post after it's been edited. (And, back to my first point, even then only if it's marked "edit" - unlike my previous... and subsequent... edits here.)

Edit X: I've lost count. Yet, annoyingly, this post still seems to make sense. Dammit.

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By Justin Bryant
13th Sep 2019 11:25

I have decided to simply not read your posts any more (so will no longer respond to your trolling nonsense).

As an aside, here's one way to generate tax relief from one's own labours:

https://www.telegraph.co.uk/news/2019/09/12/damien-hirsts-food-stained-p...

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Replying to Justin Bryant:
Psycho
By Wilson Philips
13th Sep 2019 11:39

Suits me just fine - gives me free rein to point out the error of your ways without then having to deal with subsequent waffle and piffle from you.

Starting with your post above. If you had bothered to read the article you would have realised that the tax relief was a consequence of someone else's labours.

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By Tax Dragon
13th Sep 2019 12:31

Well, strictly the relief is provided by FA2012 and there's no requirement that I'm aware of that the pre-eminent property in question was created by someone else - so, though it's by accident, Justin may have been right for once.

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Replying to Tax Dragon:
Psycho
By Wilson Philips
13th Sep 2019 13:39

I know! I was hoping that Justin would be wanting to correct me - my gripe this time is with his laziness. He could (in my view should) have added that although the article refers to someone else’s efforts the provision could also apply to one’s own. And at the same time making the point that it is of no relevance to this query.

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