Loss on sale of Buy to let

selfhelp999

Could someone advise on my situation.

I have two buy to let properties, one owned for around 10 years the other purchased about 3 years ago. The property purchased 3 years ago has not worked out and I have made a net rental loss on it every year, it was bought for £80,000 and now I am looking to sell it for £50,000.

I understand for this I can report this £30,000 allowable loss to HMRC, how could I use this £30,000 can this be offset against my rental profit for the other property which is around £3,000 per year? Can I use the allowable loss against my normal employment tax, in order to reduce my tax liability?

BoGoF

You csn't set the capital loss against any ncome, only future capital gains.

Where did your understanding come from?

Sibbers123

No, it is a capital loss.

You can only set if off against capital gains, not income.

selfhelp999

Thanks for the replies, I misunderstood the HMRC website.

Am I right in thinking the allowable loss of £30k will stay on my account indefinitely, as I am not expecting to use any of my capital gains allowance anytime soon? The only scenario i can think this will be of use to me is if i sell my other rental property and its value increase significantly.

Sibbers123

Yep (provided you haven't sold to a connected person). Still include it on your tax return showing a loss, which is then carried forward indefinitely.

00ec25

selfhelp999 wrote: »

Thanks for the replies, I misunderstood the HMRC website.

Am I right in thinking the allowable loss of £30k will stay on my account indefinitely, as I am not expecting to use any of my capital gains allowance anytime soon? The only scenario i can think this will be of use to me is if i sell my other rental property and its value increase significantly.

since you will be reporting the capital sale on your tax return (given the value is more than x4 the annual exempt amount so is a mandatory reporting requirement) the capital loss will thus be "registered" and so available for future (capital) offset for an indefinite period