Paying -ve equity off - any way to write off tax?

mrchiggles

I have a flat which is somewhere between 8k and 18k in -ve equity (hard to tell at the moment, there's a similar flat for sale and they keep cutting the prices).

I need to eventually sell it as I don't live there anymore and will have to fund the negative equity in order to pay the mortgage.

I was wondering if there is any way I can show this as a "loss" in a company or against myself and write it off against future tax? I am currently employed but I expect to be self employed in the next 5 years or so - could I do something now to reduce my future tax?

CTA_2

mrchiggles wrote: »

I have a flat which is somewhere between 8k and 18k in -ve equity (hard to tell at the moment, there's a similar flat for sale and they keep cutting the prices).

I need to eventually sell it as I don't live there anymore and will have to fund the negative equity in order to pay the mortgage.

I was wondering if there is any way I can show this as a "loss" in a company or against myself and write it off against future tax? I am currently employed but I expect to be self employed in the next 5 years or so - could I do something now to reduce my future tax?

do you live in this as your principal residence or do you let this property out?

mrchiggles

Neither currently, stands empty but it's on a residential mortgage.

CTA_2

mrchiggles wrote: »

Neither currently, stands empty but it's on a residential mortgage.

You need to give full details of the situation before i can attempt to assist.

Have you ever rented out this property?
Have you ever lived in this property?
Do you own the property 100% personally?
How long have you owned the property?
Are you selling the property to an unknown third party?

mrchiggles

Thanks for your help!! Answers below:

CTA wrote: »

You need to give full details of the situation before i can attempt to assist.

Have you ever rented out this property?
No

Have you ever lived in this property?
Yes

Do you own the property 100% personally?
Yes (the mortgage is just in my name)

How long have you owned the property?
Since Nov 2007 (hence the -ve equity)

Are you selling the property to an unknown third party?
I would be, yes

CTA_2

mrchiggles wrote: »

Thanks for your help!! Answers below:

When did you cease to live in the house? Have you elected another property to be your principal private residence?

mrchiggles

CTA wrote: »

When did you cease to live in the house? Have you elected another property to be your principal private residence?

Ceased to live in it just over 2 years ago - now live in a much bigger house which is my principle residence. Just use it now for friends/family to crash in when visiting!

CTA_2

mrchiggles wrote: »

Ceased to live in it just over 2 years ago - now live in a much bigger house which is my principle residence. Just use it now for friends/family to crash in when visiting!

will the house be sold in the next 12 months? If so, any capital loss accruing will be an exempt loss (i.e. unavailable to you).

It looks as if the loss will not be available in any event because principal private residence relief will exempt the vast majority of the fall in value assuming the price dropped significantly in 2008-09.

mrchiggles

CTA wrote: »

will the house be sold in the next 12 months? If so, any capital loss accruing will be an exempt loss (i.e. unavailable to you).

It looks as if the loss will not be available in any event because principal private residence relief will exempt the vast majority of the fall in value assuming the price dropped significantly in 2008-09.

Sounds like I should have been more specific about the dates, moved out in December 2009 so will be nearly 3 years this December. Probably looking to sell around summer next year.

Is it the principle private residence relief I need to be looking at? Are you basically saying that if the loss in value was while I was living there then I can't do anything with that loss with regard to tax? That's probably when most of the loss happened as you suggest...

CTA_2

mrchiggles wrote: »

Sounds like I should have been more specific about the dates, moved out in December 2009 so will be nearly 3 years this December. Probably looking to sell around summer next year.

Is it the principle private residence relief I need to be looking at? Are you basically saying that if the loss in value was while I was living there then I can't do anything with that loss with regard to tax? That's probably when most of the loss happened as you suggest...

Yes, the relief makes gains and losses exempt. That will be what precludes you from realising an actual (useful!) capital loss.

twig1_2

Principal private residence relief is the exemption from capital gains tax on any increase of value of the house you live in. You therefore cannot make a capital loss on it either when it is your principal private residence. Presumably you can get a capital loss from it from the date it stopped being your principal private residence but capital losses can only be offset against capital gains so are not in the form of a refund .

mrchiggles wrote: »

Sounds like I should have been more specific about the dates, moved out in December 2009 so will be nearly 3 years this December. Probably looking to sell around summer next year.

Is it the principle private residence relief I need to be looking at? Are you basically saying that if the loss in value was while I was living there then I can't do anything with that loss with regard to tax? That's probably when most of the loss happened as you suggest...