Huge loss on sale of rental property

DeckR

Hi, first time here so apologies for any stupidity...

I stupidly bought a buy-to-let / rental property in my mid-twenties without really knowing what I was doing (FOMO in the company of wealthy colleagues)...   Then the financial crisis hit, followed by the cladding scandal, and I eventually just got rid of the property for £80k less than I paid for it in 2022 as it was all too much stress (good decision at the time and I have no regrets on that point).   Can I offset this loss against my income for the 24/25 tax year in any way, as it was an investment?  (It's less than four years since I sold it).

Thanks for any help, really appreciate it...

sgthammer

Not against your income. It's a Capital Loss, so even if it's within the permitted timescale you'd be offsetting it against Capital Gains for tax purposes. Have you sold any shares/land/crypto?

poseidon1

DeckR said:

Hi, first time here so apologies for any stupidity...

I stupidly bought a buy-to-let / rental property in my mid-twenties without really knowing what I was doing (FOMO in the company of wealthy colleagues)...   Then the financial crisis hit, followed by the cladding scandal, and I eventually just got rid of the property for £80k less than I paid for it in 2022 as it was all too much stress (good decision at the time and I have no regrets on that point).   Can I offset this loss against my income for the 24/25 tax year in any way, as it was an investment?  (It's less than four years since I sold it).

Thanks for any help, really appreciate it...

Such losses are never available for offset against taxable income. However they will be available against any future  gains you make from investing in a stocks and shares portfolio ( as an example).

Presumably you won't be touching BTL in future, and an object lesson to others who believe BTL to be a one way bet.

DeckR

sgthammer said:

Not against your income. It's a Capital Loss, so even if it's within the permitted timescale you'd be offsetting it against Capital Gains for tax purposes. Have you sold any shares/land/crypto?

poseidon1 said:

DeckR said:

Hi, first time here so apologies for any stupidity...

I stupidly bought a buy-to-let / rental property in my mid-twenties without really knowing what I was doing (FOMO in the company of wealthy colleagues)...   Then the financial crisis hit, followed by the cladding scandal, and I eventually just got rid of the property for £80k less than I paid for it in 2022 as it was all too much stress (good decision at the time and I have no regrets on that point).   Can I offset this loss against my income for the 24/25 tax year in any way, as it was an investment?  (It's less than four years since I sold it).

Thanks for any help, really appreciate it...

Such losses are never available for offset against taxable income. However they will be available against any future  gains you make from investing in a stocks and shares portfolio ( as an example).

Presumably you won't be touching BTL in future, and an object lesson to others who believe BTL to be a one way bet.

Thanks for this.   Much as I expected.

I am planning selling some shares so I will use the CGT offset.

Regarding the BTL... I was in my twenties, relatively ill-educated but earning six figures.   I just followed what my wealthier well-educated peers were doing, rather than blow my earnings on fast cars.   Seemed like the right thing to do at the time as I was investing not wasting.    Incidentally, the guy who convinced me to buy the BTL bought three of them himself.   He then convinced his soon to be ex-wife to take them on as an investment just before the GFC and he walked away unscathed.   His wife is stick with as she works in finance and can't declare bankruptcy for obvious reasons.

I'm just very lucky that I worked hard to overcome the losses, and now stay super low-risk in everything I do (perhaps overly).   Lesson learned and hopefully making up for it with better decisions in life.

Thanks anyway for the quick replies :-)

Albermarle

I'm just very lucky that I worked hard to overcome the losses, and now stay super low-risk in everything I do (perhaps overly).   Lesson learned and hopefully making up for it with better decisions in life.

Being too risk averse is a risk in itself.
For example holding a lot of your money in cash rather than investing it, will almost certainly cost you a lot of money in the long run.
To be clear by investing I do not mean trading in shares or crypto, but holding mainstream investment funds long term.
MSE has a good Savings & Investments forum, and a good pensions forum if you would be interested.

ReadySteadyPop

DeckR said:

Hi, first time here so apologies for any stupidity...

I stupidly bought a buy-to-let / rental property in my mid-twenties without really knowing what I was doing (FOMO in the company of wealthy colleagues)...   Then the financial crisis hit, followed by the cladding scandal, and I eventually just got rid of the property for £80k less than I paid for it in 2022 as it was all too much stress (good decision at the time and I have no regrets on that point).   Can I offset this loss against my income for the 24/25 tax year in any way, as it was an investment?  (It's less than four years since I sold it).

Thanks for any help, really appreciate it...

Did another landlord buy it?

ReadySteadyPop

poseidon1 said:

DeckR said:

Hi, first time here so apologies for any stupidity...

I stupidly bought a buy-to-let / rental property in my mid-twenties without really knowing what I was doing (FOMO in the company of wealthy colleagues)...   Then the financial crisis hit, followed by the cladding scandal, and I eventually just got rid of the property for £80k less than I paid for it in 2022 as it was all too much stress (good decision at the time and I have no regrets on that point).   Can I offset this loss against my income for the 24/25 tax year in any way, as it was an investment?  (It's less than four years since I sold it).

Thanks for any help, really appreciate it...

Such losses are never available for offset against taxable income. However they will be available against any future  gains you make from investing in a stocks and shares portfolio ( as an example).

Presumably you won't be touching BTL in future, and an object lesson to others who believe BTL to be a one way bet.

Good advice.