Offset Stock investment loss against capital gain?

A

AaronK

Registered User
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First, apologies if this has been covered elsewhere, but any current info is appreciated.

I purchased two stocks in 2019. Alibaba & Shell.
Alibaba is down 50%, Shell is up over 50%. I bought a lot more Shell than Alibaba.

So I'd like to sell the Shell Shares now so will obviously incur capital gains on the profits.
If I also sell the Alibaba shares now (for a loss) can I offset this loss against the payable gains on the Shell Shares?

I believe the Alibaba shares will recover in the future but not in the short term, otherwise I'd hold them to recover the (unrealised) loss.
But why not sell them all now and by back in to Alibaba at a lower price point? (after the 4 weeks re-buy time)

Assuming that the premise is correct that the loss can be offset against the gain and there's no catch?
Thanks
Aaron
 
You can safely sell your Shell shares now. (Don't try saying that quickly)

You can set off any losses realised on the sale of other shares this year i.e. before the 31 December.

We do not allow speculation about share prices on askaboutmoney. But if you think that Alibaba will recover, then you might has well hold onto them until December and sell them then. Of course, if they have fully recovered, there will be no point in selling them. And you will have saved yourself the transaction charges.

Brendan
 
Thanks Brendan,

My thinking is that if Alibaba will recover in the long term, I'd still be better off selling them now at a loss while off setting the loss against the Shell gain.
So essentially I'd be back to where I started on the Alibaba purchase, as I've technically lost nothing on them thanks to the off set.
But I could buy Alibaba back at a much lower price and benefit more from the potential recovery in their price.

But my main concern was to confirm I can get out of the Alibaba loss with the off set so thanks for confirming.
 
AaronK said:
But I could buy Alibaba back at a much lower price and benefit more from the potential recovery in their price.
Click to expand...

Hi Aaron

Just to repeat - we don't allow speculation about share prices on askaboutmoney.

I can't follow your reasoning at all.

If you think that a share will fall in price, then, of course, you should sell that share. Irrespective of any considerations.

But, if you think that you can forecast the movement of share prices, then you should not be investing in shares,as you are greatly mistaken.

Brendan
 
AaronK said:
Thanks Brendan,

My thinking is that if Alibaba will recover in the long term, I'd still be better off selling them now at a loss while off setting the loss against the Shell gain.
So essentially I'd be back to where I started on the Alibaba purchase, as I've technically lost nothing on them thanks to the off set.
But I could buy Alibaba back at a much lower price and benefit more from the potential recovery in their price.

But my main concern was to confirm I can get out of the Alibaba loss with the off set so thanks for confirming.
Click to expand...
If only!

You’ve lost real cash, but clawed 1/3 of it back in the form of the cash value of the loss.
 
Gordon Gekko said:
You’ve lost real cash, but clawed 1/3 of it back in the form of the cash value of the loss.
Click to expand...
Why do i only 'claw back' 1/3 of the Alibaba loss?
The capital gains from Shell far exceed the capital loss from Alibaba...
Where does the 1/3 figure factor in?
 
Oh I think I get it...
I thought for example if my capital gains due was €10,000 from sale of Shell but I'd lost €2,000 on the Alibaba then my liability was €8,000.

Which would essentially write off the loss.

Now I'm thinking it's not that good!
The loss is subtracted from the gain before CGT is calculated so I claw back 1/3 of the €2,000 loss
 
Don't forget you can deduct 1270 from the gain before applying CGT, so depends on how much your gain is
 
AaronK said:
Oh I think I get it...
I thought for example if my capital gains due was €10,000 from sale of Shell but I'd lost €2,000 on the Alibaba then my liability was €8,000.

Which would essentially write off the loss.

Now I'm thinking it's not that good!
The loss is subtracted from the gain before CGT is calculated so I claw back 1/3 of the €2,000 loss
Click to expand...
Correct.

If a loss is €10,000 and a gain is €20,000, the gain gets reduced by €10,000, rather than the notional tax liability of €6,600 getting eliminated.

And remember the €1,270 personal exemption, obviously.
 
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