What do you fill in on next CGT return

[Kosher]

I have filed my wife's 2024/25 tax return notifying losses on two flats, after splitting the freehold into one freehold flat and two leasehold flats. When the two leasehold flats are sold do I then submit actual sales figures and costs of selling and bring forward the new value, as estimated by estate agents, as the new cost of property? The losses in 2024/25 will be brought forward and set against a capital gain on shares, the proceeds of which will be paid out soon. There will be a 75% pay out soon with the balance paid out later when HMRC agrees the corporation tax on the sale of the property portfolio in the limited company.

[AGoodman]

Was there a disposal in order to generate the 2024/25 loss? I would be surprised if simply creating the leases was sufficient to create a loss. You mention a limited company but aren't clear on its involvement. Did your wife own the freehold and grant the leases to the company?

[Kosher]

Firstly there is our property, which is now split into Freehold ground floor flat for residential purposes for me and my wife. Upstairs there is now 2 leasehold one bedroomed flats let out to tenants. The title deeds for the whole property were split in 2024/25, I got values for each flat which created a loss on the two letting flats due to all the conversion work. The whole property will hopefully be sold in 2025/26 but if they sell for below the agent's valuation there will be a further loss and selling costs. So would I now put in the 2024/25 agent's valuation as cost and set them against the selling price?

Now, so as not to get mixed up, my wife is a shareholder in a family property limited company. She is due an interim payment soon of about £100,000 and the balance will be paid in 6 months time, after HMRC have agreed the corporation tax. So presumably this loss will be set against the £100,000 sale proceeds and submitted to HMRC within 60 days, the proceeds will not utilise the cost of shares and loss brought forward and so there will be a loss still carried forward. Then another CGT return would need to be done in 6 months time and set against the further proceeds and loss set against it to create the capital gain so as we can work out tax payable. There is then still a chance there may be a loss to carry forward.

Hope things are now clearer for you to understand.

[Kosher]

Firstly there is our property, which is now split into Freehold ground floor flat for residential purposes for me and my wife. Upstairs there is now 2 leasehold one bedroomed flats let out to tenants. The title deeds for the whole property were split in 2024/25, I got values for each flat which created a loss on the two letting flats due to all the conversion work. The whole property will hopefully be sold in 2025/26 but if they sell for below the agent's valuation there will be a further loss and selling costs. So would I now put in the 2024/25 agent's valuation as cost and set them against the selling price?

Now, so as not to get mixed up, my wife is a shareholder in a family property limited company. She is due an interim payment soon of about £100,000 and the balance will be paid in 6 months time, after HMRC have agreed the corporation tax. So presumably this loss will be set against the £100,000 sale proceeds and submitted to HMRC within 60 days, the proceeds will not utilise the cost of shares and loss brought forward and so there will be a loss still carried forward. Then another CGT return would need to be done in 6 months time and set against the further proceeds and loss set against it to create the capital gain so as we can work out tax payable. There is then still a chance there may be a loss to carry forward.

Hope things are now clearer for you to understand.

[Kosher]

Was there a disposal in order to generate the 2024/25 loss? I would be surprised if simply creating the leases was sufficient to create a loss. You mention a limited company but aren't clear on its involvement. Did your wife own the freehold and grant the leases to the company?

Firstly there is our property, which is now split into Freehold ground floor flat for residential purposes for me and my wife. Upstairs there is now 2 leasehold one bedroomed flats let out to tenants. The title deeds for the whole property were split in 2024/25, I got values for each flat which created a loss on the two letting flats due to all the conversion work. The whole property will hopefully be sold in 2025/26 but if they sell for below the agent's valuation there will be a further loss and selling costs. So would I now put in the 2024/25 agent's valuation as cost and set them against the selling price?

Now, so as not to get mixed up, my wife is a shareholder in a family property limited company. She is due an interim payment soon of about £100,000 and the balance will be paid in 6 months time, after HMRC have agreed the corporation tax. So presumably this loss will be set against the £100,000 sale proceeds and submitted to HMRC within 60 days, the proceeds will not utilise the cost of shares and loss brought forward and so there will be a loss still carried forward. Then another CGT return would need to be done in 6 months time and set against the further proceeds and loss set against it to create the capital gain so as we can work out tax payable. There is then still a chance there may be a loss to carry forward.

Hope things are now clearer for you to understand.

[AGoodman]

Could you clarify:

1. Who owns the freehold? (your wife or both of you jointly?)
2. Who owns the leases of the flats? (your wife or the company?)

In general, a capital loss cannot be set against income such as a dividend, only against current or future capital gains .

[Kosher]

Could you clarify:

1. Who owns the freehold? (your wife or both of you jointly?)
2. Who owns the leases of the flats? (your wife or the company?)

In general, a capital loss cannot be set against income such as a dividend, only against current or future capital gains .

The freehold is in joint names and the leases of the flats are also in joint names. The limited company has nothing to do with our property.

Her family and another family held a property portfolio in their limited company. All the properties were sold earlier this year and corporation tax has been paid on all the gains. The corporation tax firstly needs to be agreed by HMRC before my wife receives the final 25% of the proceeds of the shares she held in the company. So there will be two payouts, one early in June and the balance of 25% in six months time.

[bd6759]

The freehold is in joint names and the leases of the flats are also in joint names. The limited company has nothing to do with our property.

That’s not what you said on 21 April!

[AGoodman]

Ah.

Assuming your 21 April post is correct, and the leases are owned by your wife alone, then the grant of the leases to her was on a no-gain/no-loss basis. It did not create a loss in 2024/25.

If your wife realises a loss when she sells the flats (calculated as I described above), she won't be able to set that against her income. She can only carry it forwards to set against future gains.

[Kosher]

The freehold is in joint names and the leases of the flats are also in joint names. The limited company has nothing to do with our property.

That’s not what you said on 21 April!

Ignore what I said on 21 April. I think perhaps my question got you confused. I wish that the limited company was ours because there is £2.5m in their bank account. If we had that we would be able to leave this country for good. Instead me and my wife are struggling pensioners and have now lost £80,000 on our timeshare.