CGT on property disposal

Baby01032012

Just few questions on calculating gain or loss on disposal of a property

If loss calculated I don’t need to do anything apart from include calculation on Form11 in 2022 ( disposal in March 2021)

I bought property in December 2002 so I can apply indexation per Cso of 1.049

I can include the 3% stamp duty along with legal fees as part of the cost and index these

Thanks for your help

Will Yam

Baby01032012 wrote: »

Just few questions on calculating gain or loss on disposal of a property

If loss calculated I don’t need to do anything apart from include calculation on Form11 in 2022 ( disposal in March 2021)

I bought property in December 2002 so I can apply indexation per Cso of 1.049

I can include the 3% stamp duty along with legal fees as part of the cost and index these

Thanks for your help

1. Yes, just report the transaction if there is a loss. Keep a record of the loss for offset against future gains.

2. Indexation correct, but watch out for indexation either creating or increasing a loss. Indexation cannot increase or create a loss.

3. Any associated costs can be included (and incidental costs associated with sale can be included to reduce the proceeds)

Baby01032012

Thanks Will Yam

The only thing I don’t understand is indexation can create or increase loss. What’s the point of indexation then. I don’t have a loss if I don’t use indexation.

Will Yam

Baby01032012 wrote: »

Thanks Will Yam

The only thing I don’t understand is indexation can create or increase loss. What’s the point of indexation then. I don’t have a loss if I don’t use indexation.

Ok. Just to take an example to make the point.

You buy an asset for €10,000, and sell it for €10,500, and have indexation of say 1.5.

So

Sales proceeds =. 10,500

Cost. 10,0000
Index. 1.5
Indexed cost. =. 15,000

Loss. =. 4,500

In this case there is no loss/no gain, as indexation can only be allowed inflate your cost to break even. You actually made a profit of 500, but indexation cannot turn that profit into a loss, so you are deemed to have made no profit.

Example 2

Same as above except you got 9,000 for it

So

Sales proceeds. 9,000

Cost. 10,000
Index. 1.5
Indexed cost. 15000
Loss. 6000

But in this case loss cannot be increased so the loss used is the actual loss i.e.1,000.


Indexation only really works to reduce a profit, but only down to zero, and not below zero.

Baby01032012

I understand now thank you.

I don’t mind not having a loss. As long as I don’t have a profit.