Loss on sale of OTP – capital loss or tax deductible loss ?

[NIF]

Does any have an opinion on the following:

My understanding of the tax legislation is that if an off the plan purchase contract is entered into with the intention of selling the property upon completion at a profit, then the profit upon sale is taxed as normal taxable income rather than as a capital gain.

So does that mean that if the property is sold at a loss, that the loss is tax deductible against other income rather than being a capital loss ?

Thanks

 

[DaleGG]

Hi

Whilst you are correct in thinking that a profit made from the sale of the property where the original intention was to "trade" will be treated as income, I suspect that you might have quite a battle to justify the loss as a trading loss.

The tax office will want to treat the sale as a Capital Loss.

You would be wise to discuss this issue with your accountant and ensure that all of your paperwork supports the original intention of trading the property for an immediate gain and even then you shoudl listen to the arguments for and against your suggested approach.

Dale