Capital Loss (How long does it stay valid for)

Lone Star

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Last year, I read a piece by Jill Kirby in the indo. It was about Capital Losses. My question is does a Capital Loss expire? I May wish to use a property capital loss in the future for a Capital gains situation. Secondly - can a married couple avail of it - if the Capital loss occurred before they married but the gains situation may in the future arise on a house they subsequently jointly bought?
 

RedOnion

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Currently indefinite, and yes married couple can share it.
However, you must use the loss before any other allowances. Eg if you make a capital gain, you must use the loss before your annual personal exemption.
 

Lone Star

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I wonder can we share it on another house up for sale (and will have hefty enough gains) that was always in the other person's name?
 

RedOnion

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Nothing to do with PAYE, capital gains is a different tax head.

Everyone has an annual allowance of 1,270. Basically it means you don't have to be submitting annual return for immaterial amounts.

But say you have a 10k loss carried forward and you make a 5k gain this year. You have to use the loss first, so you've extinguished 5k of the loss, rather than 3,730 if you had used the personal exemption first.

There's a specific clause in the tax act for sharing losses between spouses (section 1028):
"If in a year of assessment one spouse has allowable losses which he/she cannot utilise because of an insufficiency of chargeable gains (from which those allowable losses would be deductible under section 31), the balance of the losses after being set off against that spouse’s gains (if any) can be offset against the other spouse’s gains in the year of assessment. This treatment does not operate for a year of assessment where either spouse makes an application, that this subsection (subsection 3) does not apply, on or before 1 April of the following year. "
 
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Lone Star

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Ok, I've read that three times and it makes sense. I've a fair old chunk to extinguish!! It was all worth it!! Thanks very much RedOnion
 

torblednam

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Ok, I've read that three times and it makes sense. I've a fair old chunk to extinguish!! It was all worth it!! Thanks very much RedOnion
I haven’t read the section in full but in the absence of there being a provision elsewhere about carried forward losses, your historic CGT loss will only carry forward against your own future gains ie not available against your wife’s share...

Having said that, this could potentially be resolved by your wife transferring her interest to you prior to you disposing of the whole thing and realising the full gain in your own name (if the amounts involved justified doing it).
 

Lone Star

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The amount is a good bit of change alright and certainly worth any legal fees incurred - it's on a house bought in 2003 by the spouse - all in the spouse's name and a bit of a mortgage to settle on sale. It would make the difference in funding a new house that we have an offer on. I'd imagine there would be a time frame on transferring of interest and then disposal though?
 

RedOnion

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I haven’t read the section in full but in the absence of there being a provision elsewhere about carried forward losses, your historic CGT loss will only carry forward against your own future gains ie not available against your wife’s share...
Ah, I've probably highlighted the wrong sentence, but I understand that section allowed the losses to be shared (the gains of the wife are taxed on the husband unless you elect otherwise, or some such language). I'll have to look at it again.
 

torblednam

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Ah, I've probably highlighted the wrong sentence, but I understand that section allowed the losses to be shared (the gains of the wife are taxed on the husband unless you elect otherwise, or some such language). I'll have to look at it again.
I’d say you quoted exactly what you meant to, but it refers specifically to “in the year of assessment” so it only has effect where I make a loss that I cannot use in 2018 and my wife has a gain in 2018.

(There may be another provision that broadens the application to carried forward losses but I’m not going looking for it right now!).
 

RedOnion

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I’d say you quoted exactly what you meant to, but it refers specifically to “in the year of assessment” so it only has effect where I make a loss that I cannot use in 2018 and my wife has a gain in 2018.

(There may be another provision that broadens the application to carried forward losses but I’m not going looking for it right now!).
Ah, didn't help that looked at guidance notes rather than legislation!

Section 1028 has to be read together with section 31 which covers the carried forward losses piece.
 

Lone Star

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Do you need to actively assert you capital losses to revenue annually - or just hold them in reserve for when the time comes?
I'm going to read legislation mentioned above. Many thanks.
 
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