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Offsetting earlier losses from property rental against future profits

Q: My individual client rented out a residential property (not a furnished holiday let) in the UK for many years. He sold it in 2012-13 and declared the capital gain on sale on that year’s tax return. He made a property rental loss in 2012-13 which have been carried forward since then, as he had no other rental properties. He has just inherited a property from his dad which he will start renting out in 2019-20 and expects to make good profits. Can he set the property losses brought forward against these profits?

A: There isn’t a clear cut answer on this as it depends on the facts of each case.

A loss on a UK or overseas property business can only be set against future profits from the “same” business and cannot be carried forward after the property business ceases (per the 6th paragraph of PIM4210).