Question asked:


Client ,, selling S 23 property .. held in excess of 12 years.. all losses utilized in full to shelter Rental income over the years. Sale price 75,000............cost price 200,000............approx. loss € 125,000...............Please confirm that there is no restriction on this loss.. and that if not utilized in full in 2015 the balance can be carried forward and used in 2016 etc... I am aware of the restriction regarding capital allowances.. but is it my understanding that the claim made with a S 23 property is losses.. not capital allowances .

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Posted by (Questions: 101, Answers: 13)
Asked on 25 January 2016 3:31 pm
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I think the full rental loss carries forward for use against future rental income. That’s why the relief was introduced.

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Posted by (Questions: 5, Answers: 5252)
Answered on 26 January 2016 11:15 am

Alan.. my question was not about rental losses……but the loss i refer to is a CGT loss………….is this allowable against other gains in the same / future years… with restrictiion

( at 26 January 2016 11:26 am)

I don’t see why not – is there a provision to add back ”section 23” relief claimed (in the same manner as capital allowances)?

( at 26 January 2016 12:01 pm)

Alan.. my question and the answer re above is proving to be a ” hot potato “…
TCA 1997 s 555 is being quoted to me plus TCA 1997 s 372 AS .. saying that the CGT losses are restricted by reference to Capital Allowances and renewal allowances .. and this also applies to Section 23 CGT losses.
I am being told that if purchase price is 200,000… and sale price is 50,000…. so straight CGT loss 150,000….. then the 150,000 must be restricted by the Section 23 losses claimed over the years ( although the property has been held in excess of 12 years.. and it is what I call an ” ordinary Section 23 property ” i.e not a holiday home or other such property … just a plain ordinary apartment .. with normal tenancy’s conditions. etc
My understanding is that the CGT loss of 150,000 is available for use by the taxpayer against any CGT gains made in the same year or future years …
Can you clarify the position please .

( at 29 January 2016 5:33 pm)

I have included the links to the sections so you can read them yourself.
I don’t see anything in TCA 1997 s 372AS which relates to CGT losses.
TCA 1997 s 555 does restrict CGT losses by reference to capital allowances, but as I have already indicated, section 23 relief is not a capital allowance or a renewal allowance.
If you have further comments you can add them below rather than open op a new question.

( at 29 January 2016 5:39 pm)

Alan Section 23 relief would have been claimed under section 372AP… subsection 13 says that Section 555 will apply as if the deduction uner this section were a capital allowance. ..

( at 1 February 2016 1:51 pm)

See the example in the commentary to TCA 1997 s 372AP(13):
How is the withdrawal of a residential relief treated for CGT purposes?
(13) The withdrawal of rental relief expenditure is treated for CGT purposes as a balancing charge.
However, if the landlord is liable to CGT on the disposal of the property, he/she is allowed a CGT deduction for the construction etc. expenditure already obtained unless he/she makes a capital loss.
In such a case, the cost of the asset must exclude the rental relief, but he/she is given a compensating balancing charge to ensure that he/she retains the capital loss.
You buy an apartment in a park and ride facility for €50,000, obtain a rental income deduction of €35,000, and sell the apartment for €45,000.
Cost €50,000 less rental income deduction €35,000 plus compensating balancing charge –€35,000 = €50,000
In effect, the cost is not adjusted.
This leaves the allowable loss at €45,000 – €50,000 = €5,000.
Finance Act 2015 section 12 confirms this:
Section 12 makes an amendment to the interaction between the restriction of capital gains tax loss relief and section 23 property relief to ensure that a capital gains tax loss incurred on the disposal of a section 23 property will not be unintentionally restricted.

( at 4 February 2016 3:29 pm)