CGT loss offset

CGT loss offset

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A loss has risen on a sale of property after applying PRR and ALR.

Can this loss be offset against earned income or does it gat carried forward for ever and lost if no other capital activities are carried out?

Also what happens to loss made in the year of disposal on rental property income? 

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By User deleted
20th Nov 2012 18:18

Please explain ....

... how you managed to manufacture a loss

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By cathygrimmer
21st Nov 2012 10:00

Relieved as normal

I assume what you mean is that there was an overall loss on the sale of the property (which isn't that uncommon at the moment) but that some of the loss must be excluded because it relates to the proportion that would be PPR exempt if it had been a gain.

Assuming the sale was to an unconnected third party, the loss which doesn't relate to the PPR element is relievable against other gains in the same way as any other loss - or carried forward if it cannot be relieved. The loss is not restricted at all for lettings relief (or dependent relative relief) - that is only relevant if there is a gain. You basically just do the same calculation as you would for working out the PPR but using negative figures and ignoring lettings relief!

The income loss in the final year will just disappear if the individual's rental business has ceased.

 

Cathy

[email protected]

 

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By User deleted
21st Nov 2012 10:45

I did wonder ....

.... if there was a loss before main residence relief, but the fact that the OP refers to ALR (I assume that means Additional Letting Relief) has me a little confused.

Otherwise, I fully agree with Cathy

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7om
By Tom 7000
26th Nov 2012 12:26

Sunshine

Put some numbers on sunshine and we will work it out for you

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By Paul Soper
26th Nov 2012 12:46

It's the ALR!

The ALR is limited to the amount of the exempt gain unders223, or £40,000 or the gain which relates to the letting, which ever is the least and so cannot create a loss - the question says after applying PPR (correct if there was a loss to start off with as noted above) AND ALR - ALR can only apply if there is a gain so there must have been a gain to start off with, if this is less than £40,000 it must be the gain which relates to the letting in it's entireity, and the ALR is limited to that figure giving a loss of Nil or a gain of Nil, whichever you prefer.

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