Capital Gain loss on purchase of new property

phil_the

I have sold one property which has been rented out and bought another.
I have some PRR, but will still be a hefty CGT bill on the sale.
Can I claim the solicitor fees and stamp duty on the purchase of the new property as a loss in this tax year in order to reduce my overall CGT liability? Obviously this will mean I can no longer claim that back in the future if/when the new property is eventually sold.
Thanks

TheSpectator

phil_the said:

I have sold one property which has been rented out and bought another.
I have some PRR, but will still be a hefty CGT bill on the sale.
Can I claim the solicitor fees and stamp duty on the purchase of the new property as a loss in this tax year in order to reduce my overall CGT liability? Obviously this will mean I can no longer claim that back in the future if/when the new property is eventually sold.
Thanks

No, those cost were not incurred in the acquisition or disposal of the sold property.

phil_the

TheSpectator said:

No, those cost were not incurred in the acquisition or disposal of the sold property.

I know they are not claimable against the CGT on the sale, but they will be iclaimable n the future when the new house is sold. My question was can I claim that as a separate loss now, on the new property, or can that only be done when that gain is realised?

[Deleted User]

phil_the said:

TheSpectator said:

No, those cost were not incurred in the acquisition or disposal of the sold property.

I know they are not claimable against the CGT on the sale, but they will be iclaimable n the future when the new house is sold. My question was can I claim that as a separate loss now, on the new property, or can that only be done when that gain is realised?

You can only claim costs incurred in the purchase or sale of a property associated with the disposal of THAT property. 

Moreover - you can’t claim ‘a loss in this tax year’ as you have made no disposals. 

Your last assumption is correct. 

TheSpectator

phil_the said:

TheSpectator said:

No, those cost were not incurred in the acquisition or disposal of the sold property.

I know they are not claimable against the CGT on the sale, but they will be iclaimable n the future when the new house is sold. My question was can I claim that as a separate loss now, on the new property, or can that only be done when that gain is realised?

You have no loss, you have acquisitions costs on a new property.

uknick

They are the costs of buying and/or selling and therefore can't be claimed against CGT until the sale crystalizes.

If they did allow them, what's to stop one claiming them, decide not to sell and then "forget" to tell HMRC so a future tax return does not adjust for them.  I'm not saying you would do that, but your original post does say if/when the property is sold.

Plus, how do you know what rate of CGT will be applied to them before the property is sold?

phil_the

OK. Thanks. Thought it was worth checking.
Seems like there's probably some loophole here, if I sold and re-purchased the new house again, I'd be able to claim this as a loss, but that seems dodgy.

eskbanker

phil_the said:

OK. Thanks. Thought it was worth checking.
Seems like there's probably some loophole here, if I sold and re-purchased the new house again, I'd be able to claim this as a loss, but that seems dodgy.

Not only dodgy but futile, in that not only would it be a loss for CGT purposes, but a real one in cashflow terms, i.e. you'd have spent loads of money on a pointless pair of transactions!

TheSpectator

phil_the said:

OK. Thanks. Thought it was worth checking.
Seems like there's probably some loophole here, if I sold and re-purchased the new house again, I'd be able to claim this as a loss, but that seems dodgy.

Bizarre logic, why would you want to incur a (say) £20k loss to save CGT of a % of that.

And then incur double SDLT.

phil_the

yeah, was just a throwaway comment - double stamp duty would be the killer here.

[Deleted User]

phil_the said:

yeah, was just a throwaway comment - double stamp duty would be the killer here.

It’s simple cash flow. 

Make a £20000 loss - you are down £20000. 

Set this against future gains (if it were possible) saving £20000 at, say 28% - tax saving £8400. 

You are still £11600 out of pocket!