Offsetting capital losses from Spain to UK

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This topic contains 18 replies, has 6 voices, and was last updated by Profile photo of Anonymous Anonymous 7 years, 1 month ago.

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  • #55242
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi guys – does anyone know the answer to this situation. I’ve surfed the web and read up a bit but am still a bit confused so here goes –

    If I sold a Spanish property at a heavy loss, could I transfer this capital loss and use it to off-set capital gains on UK assets?

    My understanding is that whilst it is not possible to offset rental losses in relation to income. The keeping of capital losses is perfectly possible.

    Any points would be greatly appreciated.

  • #94590
    Profile photo of Anonymous
    Anonymous
    Participant

    RUSS W:
    I take it that you are British resident for tax purposes.

    I believe that you are allowed to carry forward to offset against future non UK Losses. I am not certain as these rules are changing on a on going bases

    However if you were a Spanish resident than the property would be your principal and main residence & you will not be allowed to carry forward any losses.

  • #94596
    Profile photo of Inez
    Inez
    Participant

    Hi Russ, if its any help a couple of years ago I sold a property where the owner made a large loss. He did use this against his UK tax but I dont know in what capacity he did so. The property here may have been in a company name and therefore used it against company tax in Northern Ireland but I cant remember exactly.

    Supposedly there is a treaty re tax – your accountant in the UK is probably a better person to ask!

  • #94600
    Profile photo of Anonymous
    Anonymous
    Participant

    Inez, most Accountants will not be able to assist as they do not deal with a situation where non UK tax is involved.

    At present I believe for fiscal year 2009, the government is allowing foreign property rental losses to be offset against UK rental Income.

    This relates for only year 2009. None of the year prior or after. In my cynical view this is being done by the revenue to suck people into it the system.

    You will remember when the Spanish Hacienda gave an amnesty from undeclared assets & later taxed it.

  • #94603
    Profile photo of Anonymous
    Anonymous
    Participant

    Thanks for your feedback – I am a UK resident and am meeting a tax advisor tomorrow so fingers crossed!

  • #94604
    Profile photo of Inez
    Inez
    Participant

    Thanks Shakeel, I find it safer just to spend everything, then no assets for them to tax or take 😀

    Good luck Russ!

  • #94606
    Profile photo of Anonymous
    Anonymous
    Participant

    Inez, when you spend you pay VAT.

  • #94610
    Profile photo of Inez
    Inez
    Participant

    Yes but when I earn I charge it too – just balancing the books where I can.

  • #94613
    Profile photo of Anonymous
    Anonymous
    Participant

    I am talking about the VAT that you cannot claim against your Sales invoices. e.g. Jimmy Cho shoes, Prada hand bag & the Luis Vuitton briefcase.

    For the forum users. This is a banter & do not get the impression that our Inez is a lady of a few basics such as Prada hand bag.

  • #94615
    Profile photo of Anonymous
    Anonymous
    Participant

    no just a tv star

  • #94627
    Profile photo of Inez
    Inez
    Participant

    Ha Prada bag! I wish!! Anyway, as autonomo I can actually get away with a bag or two for work, as well as clothes – not sure if Jimmy Choos would be accepted but I could try……. 🙂

  • #94629
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi guys, just had advice, it is possible to offset capital losses from foreign property on UK assets for as long as you live!

    I hope this may be of some comfort to people who are forced to sell their homes abroad and have other assets that may be subjected to a capital gains tax in the UK now or in the future.

    Apparently rumour has it that UK capital gains tax may hit 25% – in which case this point may be even more relevant to some!

    Cheers – Russ

  • #94632
    Profile photo of Anonymous
    Anonymous
    Participant

    I thought losses/gains were based on a single year. Or is property considered different then?

    If you lost 100k on shares one year, and then made 100k the following year it’s my understanding that you would be subject to CGT less the years allowance.

  • #94633
    Profile photo of Anonymous
    Anonymous
    Participant

    It depends – I think the catch lies in how long you keep the asset for. For example if you simply “flip-on” or renovate property for a quick sell then you are in effect “dealing” in property. In this case any profits are subject to income tax (certainly in the UK anyway). If you made a loss then you could offset this loss in income for the year. It isn’t however possible to carry forward this type of loss indefinitely.

    If however you keep a property (benchmark is about three years) and then sell on for a profit, you are subject to capital gains tax for that year (minus your allowance).

    If you kept a property for three years and sold at a loss then this creates your capital loss that may be carried over indefinitely.

    Dealing in shares is I assume, viewed more as an income generating activity and therefore different to long-term property investment.

    That’s my interpretation anyway but it may be worth checking!! Hope this helps.

  • #94634
    Profile photo of Anonymous
    Anonymous
    Participant

    @Russ W wrote:

    Hi guys, just had advice, it is possible to offset capital losses from foreign property on UK assets for as long as you live!

    I hope this may be of some comfort to people who are forced to sell their homes abroad and have other assets that may be subjected to a capital gains tax in the UK now or in the future.

    Apparently rumour has it that UK capital gains tax may hit 25% – in which case this point may be even more relevant to some!

    Cheers – Russ

    Actually the details are here …

    http://www.hmrc.gov.uk/cgt/intro/losses.htm

    But there is a 5 year limit, so losses made in the tax year 2008/9 will be lost for offsetting after 2015

  • #94640
    Profile photo of Anonymous
    Anonymous
    Participant

    That’s a really useful link jp1 and explains it really well. However I think your interpretation of it is incorrect.

    As long as you claim your loss within 5 years you are OK to use it whenever you like at a later date.

    Have a look at the example, it explains it far better than me!

    Of course the only problem might be if the rules change!

  • #94642
    Profile photo of Anonymous
    Anonymous
    Participant

    I stand corrected… (should have read the example!)

  • #94643
    Profile photo of Anonymous
    Anonymous
    Participant

    No worries jp1 – but it did panic me a bit on first reading.

    I guess another thing to consider is the fact that inflation will erode the “value” of any loss. Not a problem at the moment but some economists are forecasting high levels of inflation once full the effects of “quantitative easing” / printing money is felt.

  • #94749
    Profile photo of Anonymous
    Anonymous
    Participant

    Yes, that’s correct. You have a 5 year “window”, in effect. In most cases, that should be quite useful…

    Andy

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