Shelter’s Income and expenditure figures highlighted13:57 PM, 4th February 2019
About 2 weeks ago 35
I have a question regarding losses due to currency fluctuations and capital gains tax.
I bought several apartments in Poland during the period 2006 to 2008 using Swiss franc mortgages. As is well known to those involved in the Eastern European property market at the time, the Swiss franc subsequently strengthened significantly against the Polish Zloty, leaving some apartments in negative equity, and me with significant annual negative cash flow.
I have finally decided to sell off these apartments, and although I am making losses on redeeming the Swiss franc mortgages due to the exchange rate, I am making profits in Polish zloty terms, and hence it seems that I am liable to capital gains tax in the UK! It is quite a double whammy! Is there any way that I can mitigate this CGT liability, for example any tax legislation that allows for unexpected and adverse conditions given that the Swiss franc literally more than doubled against the Zloty?
As a side note and in hindsight, clearly taking out mortgages in non native currencies is highly risky and foolish, but in that era and market it was hyper-normalized, and pre 2008, one simply did not see currency swings of over 100% in Europe – my model stress tested to 25% !
Many thanks for any comments
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