Reducing a CGT bill by selling loss making shares.

D

Dinarius

Registered User
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I have recently sold a commercial building and I have paid the CGT bill on the sale.

I would like to recoup some of the bill by offsetting the loss incurred on a few shares. The shares have been sold and netted about €5,000. Originally, they cost about €20,000.

Can I offset the €15,000 loss on the shares against the CGT bill, or only 20% of it?

Many thanks.

D.
 
In simple terms you can offset the full €15K loss against subsequent capital gains. However given that you ask this question and the amounts involved I suspect that you should get indpendent professional advice when calculating your liability and filing your return. A good tax advisor/accountant could help you to avoid overestimating your liabilities.
 
Dinarius said:
I have recently sold a commercial building and I have paid the CGT bill on the sale.

I would like to recoup some of the bill by offsetting the loss incurred on a few shares. The shares have been sold and netted about €5,000. Originally, they cost about €20,000.

Can I offset the €15,000 loss on the shares against the CGT bill, or only 20% of it?

Many thanks.

D.
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You offset the loss against the gain on commercial building (not the tax bill) so answer is "20% of it".

This assumes the assets was sold in same tax year as CGT loss can't be carried back to previous tax year.
 
Ham Slicer said:
You offset the loss against the gain on commercial building (not the tax bill) so answer is "20% of it".
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Surely the answer is that you can offset 100% of the loss against the gain and the remainder (less any other allowances etc.) is taxed at 20%. This seems at odds with what you are saying...
This assumes the assets was sold in same tax year as CGT loss can't be carried back to previous tax year.
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But you can carry a capital loss forward indefinitely - i.e. if the shares were sold a few years back and the property was sold this year then the loss on the former can be offset against a gain on the latter?
 
Dinarius said:
Can I offset the €15,000 loss on the shares against the CGT bill, or only 20% of it?
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You can offset 100% of the loss (the €15k) against the CGT liability (the gain), but not against the CGT bill (which will be 20% of the liability). Therefore, use 20% of the loss to figure what you can remove from the "tax bill", or else calculate the new "tax bill" by taking the full 15k from the original gain (CGT liability) and then calculate the bill at 20% of the remainder (gain - losses)...... both should give the exact same figure.

Both ClubMan and Ham Slicer are in agreement on this, just the phrasology is a little different.

Re: Capital Loss
31 December 2005: Capital losses arising on or before 31 December 2005 may be offset against gains arising in 2005. Unused capital losses may be carried forward, there is no provision to carry capital losses back. Therefore, if capital gains arise in 2005, it may be more advantageous to crystallise losses in 2005 rather than in 2006.
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[broken link removed]

So you can only claim the losses if they happened on or before the year of the sale of the property, not if they (the shares with losses) were sold in the year(s) following the sale of the property.
 
Many thanks for the replies.

If, for example, I now deduct 20% of the €15k loss on the shares (i.e. €3k) from my CGT bill, then I'm still out of pocket to the tune of €12k. Right?

Any way I can recoup this?

Thanks again.

D.

ps.....Shares were sold in the same tax year as the CGT bill.
 
Dinarius said:
If, for example, I now deduct 20% of the €15k loss on the shares (i.e. €3k) from my CGT bill, then I'm still out of pocket to the tune of €12k. Right?

Any way I can recoup this?
Click to expand...

You made a gain of X on the property.
You made a loss of 15k on the shares.

When calculating the CGT on the property your using the CGT liability of "X - 15k" to calculate the gain (what the 20% CGT is payable on), therefore taking a tax benefit from the full 15k.

The CGT calculations aren't there to refund the full amount on any losses.
 
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