Income tax rules

Normal rules

Property business losses cannot usually be offset against the individual's other income and gains for the year. ITA 2007, ss 118-120

Instead the loss is carried forward and set against future profits of the same property business.

An individual's UK property business and overseas property business are treated as separate businesses. This means that UK property business losses can be set against UK property business profits only and overseas property business losses can be set against overseas property business profits only.

If the following year's profits are too small to absorb the loss brought forward (or if there is a loss in the following year) the unused loss is carried forward indefinitely so long as the same business continues (see below for a discussion on the cessation of a property business).

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