Sold Commercial Property at a loss - tax crossover?

vincent.lee

I'll try to explain this to the best of my ability, but please ask me anything if I'm unclear.

In December 2018, I bought a commercial high street shop, intending to open a business.

I bought it for about £60,000.

In February 2019, my Father died, and my Mother was in a very bad state, mentally and financially. I felt like I had to help her, I sold the only expendable asset I had - the shop.

I sold the shop in November 2019 for £48,000. So with a £12,000 loss. There was VAT on the purchase, and I opted in to pay tax, but since that's not really relevant (and I've paid and settled the VAT owed), I haven't included it in the sums.

In January 2020, my wife and I found out we are pregnant! So we've just bought a 2 bedroom flat, and we're going to sell our current 1 bedroom flat.

My questions are:

1. Is the £12,000 I lost on the shop able to reduce the tax on the sale of the 1 bedroom flat?

2. How do I go about getting the amount of tax reduced?

3. Is there a time limit on the loss (-£12,000) being able to carried over to the sale of a property?

I have all the documentation necessary, showing the purchase price, sales price, tax incurred, etc.

oldbikebloke

1 bed flat
if that was where you lived (before and after marriage) for entire time you owned it then why do you think CGT is due on it?
if that is a flat above the shop then it is classed as a mixed property, the residential bit is eligible for private residence relief, the commercial bit (shop) obviously not

so all you may have is a 12k loss that will be carried forward indefinitely until you have a future CGT gain to offset it against 

the above assumes the shop was owned by "you" as a sole trader, not as a limited company 

kuratowski

so all you may have is a 12k loss that will be carried forward indefinitely until you have a future CGT gain to offset it against  

Assuming of course you report it within 4 years

oldbikebloke

kuratowski said:

so all you may have is a 12k loss that will be carried forward indefinitely until you have a future CGT gain to offset it against  

Assuming of course you report it within 4 years

OP was "in business" therefore safe to assume registered for a tax return.

The sales proceeds of 48k are above the 4 x annual exempt amount threshold and therefore a CGT declaration must be included in the tax return even if no tax to pay. Consequently, the loss will be registered by virtue pf the tax return due by 31 Jan 21