OK, I suspect the answer is obvious but I have to double-check.
Having sold a foreign property, there is a capital gain. But although originally bought with the intention of a rental income, the local market didn't mature as expected and rent never exceeded financing & other costs. There are therefore accumulated tax losses on the rental side. This property business is now ended as a result of this sale.
Is there any chance the rental losses can be offset against the capital gain, thereby reducing the CGT impact? The argument being made to me is that the capital gain comes about only because the rental business subsidised the financing costs (loan interest) while the value went up. In other words, a rational person would see the two aspects holistically and only the net would be taxable.
My expectation is that rationality of that sort is not present in the UK tax system and HMRC will happily tax the gain and shrug their metaphorical shoulders at the losses. But I don't have clear references I can quote.
Is anyone able to assist? (Preferably without unwarranted sarcasm. Warranted sarcasm is acceptable.)