Query: Selling property at a loss offset of losses vs PAYE

Spec89

New Member
Messages
2
Hi all
I am selling an apartment that we lived in from 2007 to 2013, since then it has been rented out. It will ultimately sell at a loss of ~80k. I am wondering what’s the best way to deal with this from an offsetting perspective. Any help appreciated.
  • If we sell a property in 2021 at an 80k€ loss versus its purchase price in 2007 can we offset the loss against PAYE income tax as well as tax on rental income for that year?
  • If sold in 2021 can we offset against rental income tax for the year 2020 with tax return being completed in October 2021? Presume not.
  • If not, I complete a standard tax return in 2021, however can I avoid paying provisional tax for 2021 and note that this is because the property will be sold at a loss so no tax will be due? ie avoid having to claim a refund the following year.
 

jpd

Registered User
Messages
2,501
You are confounding Income Tax and Capital Gains tax.

These are two completely separate taxes and you can not offset them one against the other.

Income Tax is a tax on your income (duh!) and includes tax on your rental profit as well as your PAYE income. To calculate your rental profit you deduct some, but not all, expenses relating to the rented property from your gross rental income.

The capital loss on the sale of the property, is not offset against your income tax. A portion of the loss can be carried forward to be offset against any future capital gains you might have. As the property was owned for 14 years and was your PPR for 6 of them, you will be able to carry forward about half of the capital loss (6 years as PPR plus 1 year = 7 years out of the 14 or 50% )

Provisional tax is a prepayment of income tax - it can be 100% of previous year's tax or 90% of tax actually due for 2021 (if you can calculate/estimate that in November 2021)
 

Spec89

New Member
Messages
2
Thanks jrd figured it was a long shot offsetting versus income tax! Appreciate the response
 

Harry99

Registered User
Messages
5
Just to ask on this if you sell a property in 2021 I believe you do not have to file a return in Oct 2022 for the 2021 rental income? Is this correct?
 

Harry99

Registered User
Messages
5
Ok just I read in the year following the sale of a rental property you do not have to file a tax return once no other non paye income. See attached.
 

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Mrs Vimes

Registered User
Messages
1,069
You would still have to file income tax return for the last year in which you had rental income - ie if you sold in July 2021 you would still have to file a return for 2021, just not for 2022 et seq.

The fact that you file your return for 2021 income in 2022 is perhaps causing the confusion.
 
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