Capital Gains Tax... Date of contract

Discussion in 'Tax' started by Armada, 6 Dec 2018.

  1. Armada

    Armada Frequent Poster

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    Last edited: 6 Dec 2018
    Hi All,

    I would appreciate if someone could clarify CGT and dates for me please?

    House 1 ... sale agreed and will be liable to a CGT payment .
    House 2 ... will possibly go up for sale early in 2019 and will be probably sold at a loss

    I’m selling House 1 which will have a CGT payment due, now.
    The purchaser paid the deposit on the 3rd and I have signed our side on the 4th Dec.
    I have a closing date of Jan 2nd in mind. Am I right in saying that if I close this month in December, I cannot offset the probable loss of House No. 2 next year. But if I wait until January, I can?


    Or is the date of the contract - the date the deposit was paid and countersigned, the date that is used for CGT calculations?

    Hope this makes sense to you... basically is the date of a contract the date that the sale closes or the date a deposit is received?

    Many thanks.
     
    Last edited: 6 Dec 2018
  2. torblednam

    torblednam Frequent Poster

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    342
    Date of contract.
     
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  3. Clarkey

    Clarkey Frequent Poster

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    (b) In the case of a conditional contract the contract is not effective until the condition is satisfied. For capital gains tax purposes, the time of disposal in these circumstances is the date on which the condition is satisfied. For example, in the case of a chargeable asset which is the subject of an option, the date of disposal is the date on which the option is exercised. The option itself is of course disposed of on the date on which it was granted. Similarly, contracts where the disposal and acquisition is subject to obtaining planning permission or loan approval are conditional contracts. The time of disposal is the date the condition is satisfied, e.g. when loan approval is obtained rather than the date the contract is signed and not when the contract is closed.
     
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  4. Armada

    Armada Frequent Poster

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    511
    Thank you both for your clarification.
     
  5. Mary55555

    Mary55555 Frequent Poster

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    Hello,

    If you contract to sell house 1 ie sign the contract assume non conditional in December and make profit. House 2 you sell in jan at a loss. You can’t offset the loss against the gain. However if you sell house 1 in jan you can or if you sell house 2 in December and house 1 in jan you can use the loss.

    The cgt loss can be carried forward not brought back ..
     
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