Capital Gains and Losses?

Capital Gains and Losses?

12:23 PM, 9th January 2018, About 6 years ago 7

Text Size

Hi I decided to sell one of my BTLs – I had four. I purchased the property in 2004 so have made a gain once I have taken off costs, and the annual allowance I will still have a tax liability.

However, I also own a property in Southern Italy which despite being in an idyllic location on an unspoiled beach the area is held back by certain organisations /families. I have owned the Apartment for 10 years and in that time the complex has been seized by police (the apartments that are ‘owned’ were ‘handed’ back) but half were still owned by the builder who was arrested for being a member of a well known ‘family.’ The electricity was cut off and the pool has never been completed.

Believe it or not I did my due diligence and used a regulated UK lawyer who later it turned out was not exactly honest (yes I did take him to the SRA but they just gave him a slap on the hand and told him to get me my fees back as he had not done a good job!! no redress for him advising that I sign the contract!)

So whilst it is a lovely area, and we have had some great holidays it is a headache, so I have had it up for sale on the internet for 3 years and a sign on the apartment (Estate Agents don’t operate in Calabria in the same way as here and there is no way I would trust them anyway) It is advertised for half what we paid but even at this price we have had no interest at all.

The builder has since been released and is obviously trying to sell his so there is little chance of selling mine so right now I would say this property is worthless and I can’t even give it away but it appears there is no method to declare this to the HMRC to crystallise the loss.

Has anyone ever had a similar situation ? any thoughts welcome (apart from ‘well what did you expect buying in Southern Italy…… I say that to myself everyday !)


Share This Article


Dr Rosalind Beck

13:05 PM, 9th January 2018, About 6 years ago

Hi Cheryl. Just to get the ball rolling and not that I have any expertise in this: could you sell it to a family member at a loss the same year that you sell a UK property at a gain and crystallise some of the loss this way?

Annie Landlord

14:04 PM, 9th January 2018, About 6 years ago

Hi Cheryl, there isn't a landlord out there who hasn't made at least one problematic purchase! You need to find out what the reciprocal tax arrangements are between Italy and the UK. I am selling one of my UK rentals at a loss, and also selling my property in the USA at a substantial gain. The reciprocal arrangements between those two countries means I can't offset the UK loss against the US gain, because I have to pay the CGT in the US in dollars. The US capital gains tax is only 20%, which I shall pay in the US, but I will have to make that up to the 28% CGT I'm liable for in the UK! You may find that you can't set the loss in Italy against any gain in the UK anyway. HMRC will advise.

Paul Shears

17:26 PM, 9th January 2018, About 6 years ago

I seem to recall reading on this site somewhere that the UK inland revenue regards properties held outside the UK as totally separate matters for tax purposes and so gains and loses cannot be treated as related.
I may be mis-remembering this though and it may not be correct anyway.

Cheryl Larkin

17:37 PM, 9th January 2018, About 6 years ago

Reply to the comment left by Paul Shears at 09/01/2018 - 17:26
Thank you for you reply - I have not heard that so I will double check with HMRC if I can actually get through to someone!

Cheryl Larkin

17:42 PM, 9th January 2018, About 6 years ago

Reply to the comment left by Annie Landlord at 09/01/2018 - 14:04
Thank you for your reply - I appreciate the time you have taken. I think I need to double check. I will have to find an Italian expert but I hate anything to do with Italy now, I am always wondering if the people I am dealing with are honest. I thought the 'family' was exaggerated just to make good TV but I have found out to my cost that life & respect for the law in Southern Italy is very very different to the UK!

Cheryl Larkin

17:47 PM, 9th January 2018, About 6 years ago

Reply to the comment left by Dr Rosalind Beck at 09/01/2018 - 13:05
Hi - Thanks for your reply - I did think about doing that but the Italian Legal System is so difficult and my experience of Italian Lawyers has put me off dealing with them. And then I would probably get invested as they wouldn't be considered 'Arms Length' - I am just paranoid about anything to do with this, anything that could go wrong has. At one point the media even suggested that the IRA were involved!!

Kate Mellor

15:01 PM, 11th January 2018, About 6 years ago

Yes, as Paul says, Properties held in other countries are deemed to be separate property businesses. I'm not sure what the implications of that are for tax. Do let us know what HMRC has to say when you get through.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now