Loss on sale

Question from jan updated on 4th October 2015:

If you sell a rental property at a large loss (i.e: change in market since purchased) is it possible to claw back any of the loss made through your personal income tax? If so, how do you go about it?

Our expert Mark Withers responded:

No, the loss on sale is non deductible for the same reason a capital profit is non assessable. The only exception would be if it was purchased with the intention of disposal or you are associated with a dealer/developer and selling within 10 years of acquisition (i.e: situations where the gain would conversely have been taxable). It will be interesting to see the detail of the Government's new two year bright line test to tax gains on rental properties sold within two years in terms of whether they will also allow a deduction if a loss is crystallised within two years.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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