Capital gains questions

Selling an investment property at the moment and trying to work out the figures (roughly) at the for CGT amongst other things.

I understand that the initial stamp duty and solicitor outlay is allowable but I have one question I'd like clarified if anybody could assist.

On my annual tax returns there is an accumulated loss carried forward each year on the property. I understand that this was never allowable against my income tax but is it now allowable against the "Capital Gain" ?? and if not when or where does it become "allowable" so to speak

any assistance appreciated

D

Is this a rental loss?

If so, the loss is only allowable gains rental income. However, if the loss arose because you were renting the property at an uneconomic rate (perhaps to a related party) the loss is restricted to future rental income on that property.

Yes it is an accumulated rental loss over a four year period. Not a related party involved just that the mortgage payments didn't cover ALL of the allowable expenses over the period resulting in an accumulated loss of approx €5000 over the 4 year period.

There will be no further rental income as the property is to be sold so does the loss just die or can it be used to reduce the CGT liability ?

Thanks

Buckshee said:

Yes it is an accumulated rental loss over a four year period. Not a related party involved just that the mortgage payments didn't cover ALL of the allowable expenses over the period resulting in an accumulated loss of approx €5000 over the 4 year period.

There will be no further rental income as the property is to be sold so does the loss just die or can it be used to reduce the CGT liability ?

Thanks

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Did you mean rental income?
And have you been claiming just the mortgage interest element as an expense and not the whole mortgage repayments? (Your loss looks quite steep)

A rental loss cannot be claimed against a capital gain.

As Nige says, CGT is a completely seperate from other taxes and allowances, and no crossover losses can be applied. Only other CGT losses on asset sales in same period can possible be offset. See Revenue.ie info on CGT.

mortgage payments didn't cover ALL of the allowable expenses

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can you clarify if you were using the entire mortgage amount or the interest amount ? If you used the former, when you will have underpaid your taxes and may need to revisit your calculations as only the interest portion is allowed.

However, if you still have a loss, as said above, you can't write that off against the CGT, but you can allow it against any other rental property you have (if any) and this should have been done on a yearly basis.

Sam h

Only the interest portion of the mortgage was offset against the rental income (together with all the other allowable expenses). The rent was initially set at a very reasonable rate as i didn't mind having to to put a small "top-up" in every month. The mortgage interest coupled with depreciation on furniture / fittings etc, management fees and a few miscelleneous expenses ensured that the property was always running at a slight loss.

In a nutshell so can I take it that my €4000 accumulated loss is now of no value to me whatsoever ( tax wise ) unless i have other rental property (in profit) to write it off against ?

If I have no other rental property then the accumulated loss is just written off for ever as far as i understand what I'm being told here.

Many thanks for all the replies

I'm not an expert but I think thats it in a nutshell....similarly if you had a capital loss, you would have to wait until you had a capital gain to offset it. The fact that you don't plan on renting anymore doesn't sway the taxman. It might be worth calling them to be certain, I find they are quite helpful these days!

It might be worth calling them to be certain, I find they are quite helpful these days!

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Just a word of warning
While revenue do appear to be very helpful and do give out information and advise it may not be correct. Revenue could come after you many years in the future with penalties and interest on advice that you got and acted on from them.

If in doubt you should get professional advise.

asdfg said:

Just a word of warning
While revenue do appear to be very helpful and do give out information and advise it may not be correct. Revenue could come after you many years in the future with penalties and interest on advice that you got and acted on from them.

If in doubt you should get professional advise.

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Thanks for all the advice guys, I will be gettin someone professional to submit the exact figures but like I said in the initial question I was just doing some rough maths for myself and knew ye kind persons would be able to throw some light on my question.

tax affairs are 100% in order and i'm not gonna ruin that now for €800 ( because it's just the additional capital gain of €4000 x 20% if I can't claim the accumulated loss against the Capital gain).

Once again, you've all been very helpful, thanks