Hello, So I have a friend who brought a property off the plan then onsold it before settlement at a loss. Via a nominee in Victoria which is apparently legal there. Does this count as a capital loss to be offset with a capital gain within four years? How would the loss be treated if the buyer just walked away from the deposit? Also how are other expenses relating to the property treated like travel to inspect the property, legal fees etc. Cheers
Capital losses can be carried forward indefinitely whereas a capital gain must be reported in the year that you received it.
...and capital loss can only be offset against a future capital gain (or one crystallised in the same financial year).
Where does 4 years come into it ? If the buyer walked away from the deposit = CGT loss. Other costs may also impact. Travel is not one of them. How did you inspect a property not yet constructed ? Thats too early to be a CGT cost. Legals yes. Interest on a deposit = Yes.
Whether a gain or loss it is important that it is included in the relevant tax return and if it is a loss it is then carried forward (indefinitly). Failure to include a CGT loss can mean after two/four years the loss is not available. This came up approx 5 years ago. The old tax pack had an instruction for years which said as much as : Do you have a CGT loss you have not claimed in a prior tax return ? I queried this and the Commissioner confirmed that it was inconsistent with the amendment period rules and subsequently removed the comment from tax pack. I often encounter people who skip the CGT loss thinking they can reintroduce it in the future when a loss occurs. A mistake that can be costly.
