Selling bank shares to use losses against unrealised capital gains

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I have asked this question before on AAM, but I can’t find the previous post.

I bought shares in the four quoted banks between 2007-2014, and I have unrealised capital losses of approx. €10k on three of them.

I currently have shares as follows:
  • AIB = 3 shares, unrealised capital loss = €2,750 approx
  • Anglo capital loss = €3,000 approx
  • Bank of Ireland – I intend to keep, this is the only one with any long-term chance to breakeven
  • PTSB = 12 shares, capital loss = €4250 approx

I also bought Ryanair shares on four occasions, and I have unrealised capital gains, about €8k approx

Can I do the following:
  • Sell the 3 AIB and 12 PTSB shares now, and crystallise the capital losses
  • Sell some/all of Ryanair now, generating a capital gain
  • After four weeks, buy the same number of Ryanair shares (obviously with risk of price changes)
  • In my tax return, put the capital losses against the gain, pay zero CGT
  • Establish a new higher base price for the Ryanair shares

Will that work?

Thanks.
 
Yes, there are fees.

The fees are 2 euro per transaction plus 0.05%.

I estimate the fees as follows:

Sell 3 AIB @ 2.23 = 6.69 value, fee is 2 euro approx
Sell 12 PTSB @ 1.29, fee is 2 euro approx
Sell Ryanair, fee is 10 euro approx
Buy Ryanair, fee is 10 euro approx

Total fees 24 euro approx. plus 1% stamp duty on Ryanair, that is the big cost, approx 150-170 euro.
 
What does that achieve?

Just to keep it simple

I have unrealised losses of €5,000 in Share A

I have Ryanair Shares which cost €2,000 which are now worth €7,000

Sell now and repurchase Ryanair Shares

No CGT.

Sell in 5 years when Ryanair are worth €10,000
Cost €7,000
Gain €3,000


If you do nothing now, you have the same calculation
Sales proceeds: €10,000
Original cost €2,000
Losses forward €5,000
Gain: €3,000
 
A small technical point

If you have unused realised losses, you must use them before you use your annual exemption.

A political point

It's possible that the law may change and not allow losses on banking shares to be used, so you could argue that you should use them now while it's allowed.

I think that this is unlikely, but if we get a mad left government, anything could happen.

Brendan
 
Yes, correct, I can simply do nothing, as I already have been doing.

But, as you point out, there is a risk that in the future, losses on assets may not be allowed against gains.

Another point is that it eliminates my tiny shareholdings in AIB and PTSB.

Another point is that while you suggest there's no reason to do it now, I can't see any downside to selling & buying now?
 
I can't see any downside to selling & buying now?

I must say I think it's simpler to avoid transactions which achieve nothing.

Costs in dealing are small. But then there is bid/offer spread which you might not notice either.

If the government changed, then I probably would do it. Otherwise I wouldn't bother.

Brendan
 
Kinda off-topic I would be more afraid of the present lot, to be honest, if you listen carefully to their newer members of the present parties in power They will make the changes you are suggesting and get away with it,

I don't think a Mad left government made up of parties never in power before is the worry,
New parties made up of the left would not get away with changes like that,
You only have to look at the government parties who have been in power since the foundation of this state using the pension levy to raiding private pension pots all went along with it no problem to cover their collective bad governance,

The same with USC brought it as a temporary measure all promised to get rid of it for a few elections until we all were used to paying it not a word about getting rid of it now,

Do you think SF if they were in power when the pension pots got raided would have got away with doing so I suspect the answer is a big no,
 
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New parties made up of the left would not get away with changes like that,
Some very interesting points there and I am appalled at the irresponsibility of our supposed most financially conservative party Fine Gael.

But why do you think that a Sinn Féin led government would not be able to make tax changes that a Fine Gael led government could? What would stop Sinn Féin that would not be able to stop Fine Gael?

Brendan
 
One thing achieved by increasing your cost base is the potential for offseting it as a loss against other gains. Brendan's example considered that in 5 years the Ryanair shares are worth €10,000, but what if they're worth €5,000 instead. Now you've a potential €2k loss you can harvest against some other gain if you choose.
 
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Run the numbers based on Ryanair's share price falling.

Sell in 5 years when Ryanair are worth €5,000
Cost €7,000
Loss: €2,000 no CGT
€2,000 losses forward


If you do nothing now, you have the same calculation
Sales proceeds: €5,000
Original cost €2,000
Gain on Ryanair: €3,000
Losses on Share A: (€5,000)
€2,000 losses forward

So, no difference at all.

Brendan
 
Not sure I follow your question?

The proposal is to sell Share A now and sell Ryanair now, so that the cost base of Ryanair will be increased to €7,000

So the losses on Share A can be used only once. If they are used now, they can't be used again.

If I have not understood your question, could you set out a table showing the way you think it should be done.

Brendan
 
I went against BB advice.

I sold PTSB today, [email protected] = 15.48 less fee of 2.01.

So I have crystallised an approx 4,250 capital loss.

I will add that to the Anglo loss.

I will sell Ryanair tomorrow, and buy back on Friday.
 
I went against BB advice.

I sold PTSB today, [email protected] = 15.48 less fee of 2.01.

So I have crystallised an approx 4,250 capital loss.

I will add that to the Anglo loss.

I will sell Ryanair tomorrow, and buy back on Friday.
At the very least, utilise the annual exemption from CGT of €1,270 on top of your losses when doing the arithmetic here... at least that might cover some of your transaction costs.
 
Anglo capital loss, entire original amount = 3021.74
PTSB capital loss crystallised, after sale yesterday = 4237.07

Calculation = original gross costs including stockbroker purchase fees and stamp duty, less net proceeds yesterday, after 2.01 fee

Total capital losses realised so far = 7,258.81

Ryanair sold today, capital gain realised = 7500 approx, to be checked later.

So the capital gain less the losses will be well below 1,270.

Plan is working so far, and the AIB losses remain unrealised, to be carried forward.
 
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