CGT losses offsetting gains

Tar.Aldarion

Am I understanding this correctly.
If I register CGT losses any year, they can be brought forward until you realise a gain in any year, you just need to register them that year?

Also if you lost €100 on a trade. You then gain €1370 on shares from a different company. Your tax free allowance of year of disposal is then €1,270 + €100?
Does this mean you actually lose 66% of losses then?

Also if reacquiring the shares with the gains shares, you can do so immediately or you have to wait a month here?
My understanding is I can't rebuy the shares that had a loss in 4 weeks, but for the gains shares I can?

Tar.Aldarion

Tar.Aldarion wrote: »

Am I understanding this correctly.
If I register CGT losses any year, they can be brought forward until you realise a gain in any year, you just need to register them that year?

Also if you lost €100 on a trade. You then gain €1370 on shares from a different company. Your tax free allowance of year of disposal is then €1,270 + €100?
Does this mean you actually lose 66% of losses then?

Also if reacquiring the shares with the gains shares, you can do so immediately or you have to wait a month here?
My understanding is I can't rebuy the shares that had a loss in 4 weeks, but for the gains shares I can?

There is some detail and discussion on this in this thread which should be helpful around the 4 weeks: https://www.boards.ie/vbulletin/showthread.php?t=2058156319

Read this document: https://revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-02-05.pdf

Firstly, if you sell a share this year you need to include it in your tax return next year. This is the case whether you make a profit or a loss. The Tax needs to be paid this year.

Whether you can carry forward the loss to offset against future gains, this depends on how long you held the shares. If you held them for less than 4 weeks you cannot carry forward the loss. If you held them for longer than 4 weeks you can carry them forward to offset in future.

I don't quite follow what you mean with the last couple of questions. Are you asking if you sell a load of shares for a profit, and then decide, within 4 weeks, to go back and buy shares in the same company is this prohibited?

inisfree0504

Re the last few questions and 4 week rule. What you are referring to are the rules relating to what is called bed and breakfasting, where you realise a paper loss in order to reduce your CGT liability for that year, but immediately buy back the shares. You have, de facto, never really ceased to own the shares.

If you sell at a loss and buy back within four weeks, you may only use that loss to offset subsequent gains on those particular shares/class of shares.

For example, I buy 10 AAPL shares. I sell them on Monday at a loss of €100. On Tuesday, I buy back 10 AAPL shares.

If, at some point in the future I sell my AAPL shares at a profit of €1500, I am entitled to use the previous loss in calculating my liability (in this case €500).

However, I may not use that €1000 loss against, say, a gain on MSFT shares, if I have bought back AAPL within 4 weeks.

You are correct that the rule has no bearing on profits.

See here:

"In the event of a sale of shares followed by a
re-acquisition within four weeks a loss on the sale will be allowed only
against gains derived from the disposal of the shares re-acquired within four
weeks. Where the reacquisition involves a fraction only of the shares sold
the restriction will be confined to a corresponding fraction of the loss."

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-04-03.pdf

I am not an accountant and this is just my understanding of things. You would always be wise to seek professional advice.

Tar.Aldarion

Thanks! I think things are pretty much what I thought.