An interesting one I hope:
I have UK property in a UK company, ABC Ltd. As the properties have been owned for a long time, each has a substantial Capital Gain associated with it.
A few years ago I formed a Spanish company ABC SL, a 100% subsidiary of ABC Ltd. It borrowed money from ABC Ltd to buy Spanish property (not my wisest ever purchase!)
The Spanish properties are down about 1/3 in value.
Ideally I would like to transfer the Spanish properties into the UK company at their original cost, so that selling them would realize a Capital Loss which would offset a Capital Gain if I also sold some UK property.
However, I have been advised I cannot do this and am only allowed to do the transfer at current values. If I do this (or, equivalently, sell the Spanish properties while they are still owned by the Spanish company) the Spanish company will make a loss and it will be unable to repay the loan to the UK Company. However, I am told that in that case the UK Company would not be able to write off some of the loan as a loss.
So I seem to be absolutely stuck with a loss in Spain that I cannot offset against a UK gain - even though they are effectively owned by the same company. Does anyone have any bright ideas, please?
I have UK property in a UK company, ABC Ltd. As the properties have been owned for a long time, each has a substantial Capital Gain associated with it.
A few years ago I formed a Spanish company ABC SL, a 100% subsidiary of ABC Ltd. It borrowed money from ABC Ltd to buy Spanish property (not my wisest ever purchase!)
The Spanish properties are down about 1/3 in value.
Ideally I would like to transfer the Spanish properties into the UK company at their original cost, so that selling them would realize a Capital Loss which would offset a Capital Gain if I also sold some UK property.
However, I have been advised I cannot do this and am only allowed to do the transfer at current values. If I do this (or, equivalently, sell the Spanish properties while they are still owned by the Spanish company) the Spanish company will make a loss and it will be unable to repay the loan to the UK Company. However, I am told that in that case the UK Company would not be able to write off some of the loan as a loss.
So I seem to be absolutely stuck with a loss in Spain that I cannot offset against a UK gain - even though they are effectively owned by the same company. Does anyone have any bright ideas, please?
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