selling rental properties one at a CGT loss and one at a CGT gain.

B

banshee

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hi, looking for advice please....
Wife and I have two rental properties, A and B, intending to sell each.
A will sell at a loss , so no cap gains tax applicable.
B will sell for a profit , so cap gains tax applies.

We hope to sell each in 2018. I presume I should sell A first so that the loss be carried forward to offset tax liability on B. What is the time frame here to do so ? Should there be a minimum period between sale of A and B or does it matter if all sold in same year ? e.g. it doesn't matter which sold first provided both sold in same tax year.

I take it, that if B sold first, it is imperative A sells within the same tax year to avoid/reduce cap gain tax ?

Many thanks.
 
If you sell the loss maker first, you can carry the losses forward indefinitely.

If you sell the profit maker before the loss maker, you must sell the loss maker in the same year to avail of the losses.

If you sell the profit maker in 2017, and don't sell the loss maker until 2019, you will have to pay CGT and will not be able to carry the CGT losses back.You will of course be able to carry the losses forward against future gains.


Brendan
 
hi , Sorry but I need to resurrect this thread as I failed to mention in my opening post that property B (profit maker) is solely owned by my wife and property A (loss maker) is owned jointly between my wife and I. In this scenario, is it only half of the property A losses that can be offset against the total gains of property B ? eg Prop A sold at loss of 100k and prop B sold at gain of 50K, only loss of 50K (as jointly owned) can be set off the 50K gains.
 
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CGT is reported separately for each of you, so yes only half the loss of property A would be available to offset the gain your wife makes on property B

Your loss on property A can be carried forward until you have gains to offset.

However, as transfers between spouses are not taxable, I think that you can offset the whole loss against the gain - it's as if she transferred 1/2 of property B to you but you need to get this confirmed

This is from the Guide to CGT on the Revenue website
1. Married Persons or Civil Partners
The net gains which accrue in a year of assessment to spouses or civil partners living together are charged on the assessable spouse or nominated civil partner unless either the husband, wife or either civil partner has applied to be charged separately. Applications for separate assessment must be made before 1 April in the year following the year of assessment.
In general, transfers of assets between spouses or civil partners living together in a year of assessment are not treated as disposals for Capital Gains Tax purposes. Instead, the spouse or civil partner receiving the asset is treated as having acquired it at the same time and for the same consideration as the transferring spouse or civil partner originally acquired it.
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No
jpd said:
CGT is reported separately for each of you, so yes only half the loss of property A would be available to offset the gain your wife makes on property B

Your loss on property A can be carried forward until you have gains to offset.

However, as transfers between spouses are not taxable, I think that you can offset the whole loss against the gain - it's as if she transferred 1/2 of property B to you but you need to get this confirmed

This is from the Guide to CGT on the Revenue website
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The above is wildly inaccurate.

Losses are automatically shared between spouses unless they formally elect not to do so.
 
Thank you very much for the information.

I presume when speaking of selling profit maker and loss maker in the same year to offset losses v gains, we are referring to the tax year, January to December, rather than calendar year from date of sale of a property ?
 
Thank you. Finally, I am still confused, can my wife avail of the total losses of the loss maker to offset her gains or just half of those losses ?
 
Brendan Burgess said:
If you sell the profit maker before the loss maker, you must sell the loss maker in the same year to avail of the losses.
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Is that really the full calendar year, or within the same CGT period:

For disposals made between 1 January and 30 November (the initial period) you must pay CGT by 15 December of the same year.

For disposals made between 1 December and 31 December (the later period) you must pay CGT by 31 January of the next year.​

So they would both need to sell between Jan & Nov, or both within December of the same year?
 
thos said:
Is that really the full calendar year, or within the same CGT period:

For disposals made between 1 January and 30 November (the initial period) you must pay CGT by 15 December of the same year.

For disposals made between 1 December and 31 December (the later period) you must pay CGT by 31 January of the next year.​

So they would both need to sell between Jan & Nov, or both within December of the same year?
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No, same calendar year.

You are mixing up payment dates and returns.

The 15 December / 31 January dates are dates by which you pay for 11 months / 1 month.

Then your return goes in on or before 31 October to cover the entire 12 month period and reflect the payments.
 
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