Capital Gains taxed (trading bent) - What about Capital Loss ??

[Bluekiwi]

Rental Trust - rental portfolio property. (bought 2008 )

Okay I have lost about 150k through doing a stupid flat conversion.
House cost 400k, and was valued at 450k.f

Flat consent etc cost about 275k..
Valuation will be about 550k.

So 100k equity gain on a spend of 275k.
So lost about 175k.

If I sold now I would make a capital loss of about 125k.
Can this be used to my tax advantage.

I have done trading last 2 years, If I sell a property I just bought last year and make a capiatl gain of say 75k.
Would that capital gain be offset against the capital loss.

Or under the new rules, if you are also a trader, as well as an investor.
Can you only be taxed on capital gains, but not be able to access capital loss's ???

[spaceman]

Pigs is pigs....a loss is a loss.

If you sell for less than you paid then (in most cases) you have made a loss........you only get taxed on your profits....if your overall position is a loss then you will have no tax to pay.....if you're currently in profit and have tax to pay realising the loss from that property will reduce or negate the amount of tax you owe.

I think you're over thinking this.

Cheers
Spaceman

[jedimaster]

Rental Trust - rental portfolio property. (bought 200

Okay I have lost about 150k through doing a stupid flat conversion.
House cost 400k, and was valued at 450k.f

Flat consent etc cost about 275k..
Valuation will be about 550k.

So 100k equity gain on a spend of 275k.
So lost about 175k.

If I sold now I would make a capital loss of about 125k.
Can this be used to my tax advantage.

I have done trading last 2 years, If I sell a property I just bought last year and make a capiatl gain of say 75k.
Would that capital gain be offset against the capital loss.

Or under the new rules, if you are also a trader, as well as an investor.
Can you only be taxed on capital gains, but not be able to access capital loss's ???

Hi bluekiwi

This is a very specific fact situation and you should certainly seek accounting advice.

However, I understand that where you purchase a property which is intended to be a rental, and the property is "tainted" because you are simultaneously property trading, you can claim what would ordinarily be a capital loss as a tax loss on sale.

I.e. it sounds like if you to sell this particular property for a capital gain, the gain would be taxable, as it sounds like the property is tainted given you are also trading property. So if you are taxable on the one hand, it would follow that you can claim the loss on a tainted property.

[Bluekiwi]

Hi bluekiwi

This is a very specific fact situation and you should certainly seek accounting advice.

However, I understand that where you purchase a property which is intended to be a rental, and the property is "tainted" because you are simultaneously property trading, you can claim what would ordinarily be a capital loss as a tax loss on sale.

I.e. it sounds like if you to sell this particular property for a capital gain, the gain would be taxable, as it sounds like the property is tainted given you are also trading property. So if you are taxable on the one hand, it would follow that you can claim the loss on a tainted property.

Thanks for that.
Yep your assumptions are correct.

And yep will always seek accounting advice.
But always try and get some investigation done on here first.

The one that is a tax loss on sale, I am looking at selling as one option, and just thought maybe this could offset the profit on the sale of another.

The one I am selling, is a 10 bedroom house.
Which is great yield, but doesnt work for me, as the banks will not finance 80% of the new RV, as they deem it commercial just as it has lots of rooms.
I dont like this, so looking to quit it.

[DaveW]

Rental Trust - rental portfolio property. (bought 2008 )

Okay I have lost about 150k through doing a stupid flat conversion.
House cost 400k, and was valued at 450k.f

Flat consent etc cost about 275k..
Valuation will be about 550k.

So 100k equity gain on a spend of 275k.
So lost about 175k.

If I sold now I would make a capital loss of about 125k.
Can this be used to my tax advantage.

I have done trading last 2 years, If I sell a property I just bought last year and make a capiatl gain of say 75k.
Would that capital gain be offset against the capital loss.

Or under the new rules, if you are also a trader, as well as an investor.
Can you only be taxed on capital gains, but not be able to access capital loss's ???

Are the 450k and 550k figures both registered valuations? the same valuer?

[spaceman]

.... you can claim what would ordinarily be a capital loss as a tax loss on sale.
...

Care to explain the difference between a "capital loss" and a "tax loss"?????....your terms not mine, curious as to what you mean.

Cheers
Spaceman

[jedimaster]

Care to explain the difference between a "capital loss" and a "tax loss"?????....your terms not mine, curious as to what you mean.

Cheers
Spaceman

spaceman,

Sorry I probably could have been clearer. Capital loss = loss made to your pocket, but a loss unable to be claimed in your tax return, i.e. you have no other business/ property trading activity going on, and you purchase a home / rental at the height of a boom, which you sell 3 years later for a loss. Not able to be claimed in tax return

On the other hand, losses from your LTC/LAQC = tax loss. Also, a tax loss is the example I mentioned may apply to the OP in his very specific fact situation, i.e loss on the sale of his rental may be able to be claimed as a tax loss (where it otherwise woudn't be) due to the simultaneous property trading he has going on.

[Bluekiwi]

spaceman,

Sorry I probably could have been clearer. Capital loss = loss made to your pocket, but a loss unable to be claimed in your tax return, i.e. you have no other business/ property trading activity going on, and you purchase a home / rental at the height of a boom, which you sell 3 years later for a loss. Not able to be claimed in tax return

On the other hand, losses from your LTC/LAQC = tax loss. Also, a tax loss is the example I mentioned may apply to the OP in his very specific fact situation, i.e loss on the sale of his rental may be able to be claimed as a tax loss (where it otherwise woudn't be) due to the simultaneous property trading he has going on.

Only glitch I have here master, is that the property that I could make a tax loss on, was purchased pre the new tainting rules, and pre me doing any trading.
Purchased in 2009, trading began in 2010.

[Bluekiwi]

Are the 450k and 550k figures both registered valuations? the same valuer?

Yep same people.

[spaceman]

Thanks Jedimaster.

Looks like I didn't read the OP properly.

Bluekiwi....if I understand correctly what you're asking is can you take the loss from one entity to another. In this case from one entity where capital gain isn't normally taxed (as it's not treated as income) into another entity where capital gain is taxed as income...... I would guess not, smacks of trying to have your cake and eat it too, to me.

Re tainting...... only properties purchased after you started trading would be tainted......seems to me that if this wasn't the case then you might have been able to have that cake and eat it too....kinda

Cheers
Spaceman

[Bluekiwi]

No, not looking to move loss's around entities.
The 2 properties are in the same entity which is a rental trust. (I have done flips in a trading trust 2010 and 2011).

One I may have to sell, even though I just bought it in December, as I the banks are giving me grief treating it as commecial (just because its got lots of bedrooms).
But upside is that its valued 100k more than I paid.
So I could make a 100k profit, but I would be taxed on this, due to being a trader 2010 and 2011.

So I was wondering if perhaps I should liquidate my other problem property, bought in 2008, pre trading days.
That is valued about 550k, and cost me about 675k.
Selling would incur a capital loss of about 125k.

I am thinking out loud whether these capital gains and capital loss's can be offset so I dont have to pay tax.
Its more about eating humbe pie rather than having cake.

It would be nice to wipe both these real estate mis-adventurers from my mind though.

[spaceman]

LOLZ...now I'm more confused....I should probably just STFU.

Good luck

Cheers
Spaceman

[speights boy]

It would be nice to wipe both these real estate mis-adventurers from my mind though.

A 100k gross profit in 5 months is a mis-adventure?

[Bluekiwi]

"Could" be, depends, might be 75k and then agents fee's take it to 50k.
Dont know, not many 10 double bedroom houses being sold, so its unknown territory.
The 125k captial loss (175k loss from where I was before the flat started) - thats a mis-advenutre.

And yeah it was a mis-advenuture as I nearly lost my 10% deposit auction day deposit.
As banks reneged on finance and I had last minute finance applications going, and a clause in the specialist auciton S&P that said contract could be canceled if I didnt settle on the due date.

[Wayne]

Look at it this way. Look at each property seperately - if you made a profit on selling would it be taxed? If yes then a loss can be claimed if you made a loss. And if one is a loss and the other is a gain then they can cancel each other.

By the looks of it though, the property you would make a loss on wouldn't be taxed if you made a profit so wouldn't be included - unless you want to bring all your property under the 'tax on gain' umbrella and that is unlikely.