loss on disposal of PPR with period of letting

loss on disposal of PPR with period of letting

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Can a capital loss be claimed in a situation where a house is sold at a loss and the owner only lived in the property for the first two years of ownership and then moved out and let the whole property to a third party for several years before selling it at a loss.  

Replies (9)

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By Tim Vane
20th Jan 2017 12:36

Did the house have curtains or not? You don't specify.

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By Ruddles
20th Jan 2017 12:59

Yes (in answer to the OP, not to Tim)

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By L Haldane
20th Jan 2017 13:06

So is it just a case of pro-rating the loss over the period of owner occupancy/ letting or is there a restriction on the allowable loss for the final 18 months being deemed as owner occupancy ?

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Replying to L Haldane:
By Ruddles
20th Jan 2017 14:16

You calculate the loss exactly as you would have calculated a gain

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Replying to Ruddles:
By Paul D Utherone
20th Jan 2017 18:14

...and then pro rate that to exclude the exempt periods (use & final 18 months) surely as a PPR cannot give rise to an allowable loss

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Replying to Paul D Utherone:
By Ruddles
20th Jan 2017 18:25

Given that the question was about a property previously used as a principal private residence, I took it as read that I was referring to calculation of a gain on a property that had been previously used as a principal private residence and didn't need to state that one would calculate the loss exactly as one would have calculated the gain on a property previously used as a private residence. But I suppose that some folks need things spelt out for them.

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Replying to Ruddles:
By Paul D Utherone
21st Jan 2017 11:20

Fair enough...but you never know :)

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Replying to Paul D Utherone:
Portia profile image
By Portia Nina Levin
21st Jan 2017 10:38

By my reading of the legislation part of the loss attributable to the letting is also not allowable. Ruddles disagrees, if I recall correctly, and has found material in HMRC manuals to support her opinion.

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Replying to Portia Nina Levin:
By Ruddles
21st Jan 2017 10:58

I disagree because I interpret the legislation differently from Portia, although I accept that there is an argument that the general rule that disallows a loss that would have been a non-chargeable gain should also apply in the case of letting relief. But until there is binding case law or specific statutory provision we won't know which is correct.

Nevertheless, HMRC guidance does follow my own reading of the legislation and whether or not HMRC are wrong I would be computing the loss in accordance with that guidance.

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