Question asked:

0
0

Client was a partner in a commercial letting partnership where he invested €500k initially. The Partnership loans were sold on after it could not make it's repayments and client has had to settle his personal guarantee on the partnership debt for €150k. Are these two amounts treated as capital losses or can either or both be treated as losses to off-set against Income Tax.

Marked as spam
Posted by (Questions: 58, Answers: 2)
Asked on 10 October 2018 5:57 pm
64 views
0
Private answer

1. It appears he invested €500k in property (an asset) and that investment was lost (as a result of the property being sold to pay bank debt). Correct? If so then it is a capital loss but the loss is the difference between the purchase price and the sale price (not €500k).

2. He also had to stump up an additional €150k to cover the shortfall (sale price did not cover the bank debt). I think this is a loss arising from a debt obligation which is not a "debt on a security." It is "capital" but not allowable.

3. I don't consider these losses to be allowable for income tax purposes.

Marked as spam
Posted by (Questions: 5, Answers: 5252)
Answered on 16 October 2018 7:29 pm