Read an article in Sunday Indo on reducing CGT to 10% on a temporary basis.Got me thinking about another way CGT allowances could be set out to improve cash flow.
Below are the figures on proposal to bring CGT allowance froward for
Investor/Landlord/Homeowner
Purchases property A in 2013 for 320k euro
Purchases property B in 2015 for 200k euro
Runs into financial difficulty in 2017 and forced to sell property A as this has highest repayments and not paying its way.
Sells property A in 2017 for 280k euro and suffers a 40k loss
Sells property B in 2021 for 350k euro and makes a profit of 150k
The capital gains tax bill for 2021 would be 150k x 33% = 49,500k - 40k loss (from 2017) = 9,500k -1270 (personal allowance)= 8,230k Capital gain tax to pay in 2021.
My proposal is from 2016 to claw back the capital loss as follows on all rental and PAYE income
2016 8k
2017 8k
2018 8k
2019 8k
2020 8k
Total 40
So in 2021 instead of claiming the 40k loss the property owner could only claim their own personal CGT allowance of 1,270 and still have a Capital Tax Bill of 8,230k same figure as applies at present and no loss to the exchequer. This would improve cash flow for investors and landlords.