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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4722
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hi, My mother has a commercial property that she is looking

Customer Question

Hi,
My mother has a commercial property that she is looking to sell which will be at quite a large loss. She also has a lot of shares with profits on.
if she sells both in the same tax year can she offset the loss against the profits?
One additional point - The property is likely to be sold to a SIPP and I am the beneficiary of the SIPP.
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.

Hello and welcome to the site. Thank you for your question.

Your mother can use the losses to reduce her gain made in the same tax year.

More information on offset of losses on chargeable asset can be found here

https://www.gov.uk/capital-gains-tax/losses

If you are selling an asset to a family member and/or connected person, then you can't deduct a loss on disposal of an asset to a family member unless you are offsetting a gain from the same person.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 year ago.

Hi,

sorry could you clarify re the sipp does that count as a family member or connected person?

also I know there are rules on property income losses do these definitely not carry into capital gains so property capital losses can be offset against any other gains?

thanks,

Andrew

Expert:  taxadvisor.uk replied 1 year ago.

Andew, thank you for your reply.

As you are the beneficiary of the SIPP, HMRC would argue sale is to a family member/connected person.

Property income losses cannot be offset against capital gains, I'm afraid.

I hope this is helpful.

Customer: replied 1 year ago.

Hi,

I'm sorry to be awkward but re the SIPP you say that HMRC are likely to argue that the sale is to a family.

Is there legislation that does connect them for Capital Gains Tax (in which case presumably HMRC are correct)?

also my clarification re the offset referred to general gains being offset against property capital losses (not property income) as someone told me that they couldn't be offset so I just want to check.

Expert:  taxadvisor.uk replied 1 year ago.

Andrew, thank you for your reply.

I am not aware of legislation that connects SIPP for CGT purposes.

As I see it, you wish to buy your mum's commercial property being sold to you at a loss. This property would form part of SIPP and you are the beneficiary of that SIPP.

Your mother is selling the property to a family member giving rise to capital loss for her CGT purposes. HMRC guidelines are clear "You can’t deduct a loss from giving, selling or disposing of an asset to a family member unless you’re offsetting a gain from the same person."

In general terms, if you make gains from selling shares you can offset these gains against a loss you make on a property transaction in the same year. This is allowable.

I hope this is helpful

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