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bigduckontax, Accountant
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My sister-in-law has holiday-let properties in the UK and an

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My sister-in-law has holiday-let properties in the UK and an investment property in Eire. The former with prospective capital gains in excess of £300.000; the latter with a prospective capital loss in excess of £200,000. Is there a tax agreement between the two countries that can offset one against the other? ***** *****

Hello Richard, I am one of the experts on Just Answer and pleased to be able to help you with your question.

The Double Taxation Convention between Ireland and the UK embraces Capital Gains Tax (CGT) in both jurisdictions. Thus gains can only be taxed in one or the other. This is achieved by means of tax credits, the tax paid in one country being allowed against the liability in the other. The convention does not, however, protect you from differences in rates of taxation. Where we go on from here depends upon your sister in law's country of residence.

Customer: replied 3 months ago.
Thanks for your comment, which I understand. How silly of me, though, not to say that my sister-in-law (Anne) is a UK citizen and resident in the UK. Anne has no taxable income or gains in the Republic. That seems to suggest there is no effective way of transferring the Irish loss into a UK tax environment. What do you say?

I concur. She will be taxed in the UK and unless and until she crystalises an UK gain and an Irish loss in the same tax year then there will be no loss capable of offsetting her British gain.

Please be so kind as to rate me befre you leave the Just Answer site.

Customer: replied 3 months ago.
Thanks. You say about crystallizing Irish & UK losses and gains but I understood from from what you first said that only the actual taxes paid are off-settable, not the gains/losses themselves. So, just to clarify: as no tax will be payable to the Irish Revenue on the sale at a loss of the Irish property, there is no Irish tax credit available to set off against a UK tax credit. Which is why the loss in Ireland is "stuck" in Ireland! Is that so? Or can a notional "negative" tax credit be transferred to the UK? One needs a fiendish mind to go through all this!

You are correct, however on the sale of the Irish business any loss or gain made would be liable to UK taxation so if done in the same tax year there would be a loss to offset against the gain thus reducing exposure to UK taxation.

Customer: replied 3 months ago.
Ok! So (finally maybe!), to relate it back to you, the sale of the Irish and UK properties must happen in the same tax year in each country because only then can any form of offset be achieved. That is, the capital gains tax liability will be assessed by the UK HMCE based on the NET gross gain on worldwide capital gains. If the Irish sale doesn't synchronise with the UK sales, then one would only have tax credits to play with, under the double-taxation agreement. As there would be no tax credit ever available from Ireland, no offset would ever be available under the DT agreement. Yes? Thanks ever so much.

Well, not quite right. Both sales would attract CGT so were the loss maker sold in an earlier tax year then any loss could be carried forward indefinitely and used to mop up gains in subsequent years .

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Customer: replied 3 months ago.
Ok. Thanks very much. Regards, ***** *****

Delighted to have been of assistance, Richard.

Thsnk you for your support.

And your kind bonus.