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Re: Capital loss claim

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Newbie

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I signed a contract in Feb 2016 for off the plan land purchase and paid 5% deposit against it. In 2018, developer cancelled my contract using sunset clause and returned 5% deposit paid in 2016. I filed a case in court against developer to get contract reinstated as land was appreciated by 70% and developer didn't apply for approvals on time. I lost this case in 2018 and court ordered to pay developer's legal fees and court fees. Also, I did incur legal fees on my own to file this case in court.

Question: Can I claim Capital loss in my Tax Return? If Yes, How?

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Most helpful response

Devotee

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Hi Paryanister,

 

Firstly, I'll suggest you go and see a tax agent as there are two potential issues I see:

- The timing of the capital loss: whether it be 2016 or 2018

- The amount of the capital loss: whether the developers fees can be included or not

 

Capital losses are not claimable against wages, investment income (dividends, interest, etc), or business income. They are only claimable against capital gains.

 

Your legal fees should be claimable as a capital loss, but I think it's too complicated a situation for a forum.

 

Regards,

Adam

2 REPLIES 2
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Most helpful response

Devotee

Replies 0

Hi Paryanister,

 

Firstly, I'll suggest you go and see a tax agent as there are two potential issues I see:

- The timing of the capital loss: whether it be 2016 or 2018

- The amount of the capital loss: whether the developers fees can be included or not

 

Capital losses are not claimable against wages, investment income (dividends, interest, etc), or business income. They are only claimable against capital gains.

 

Your legal fees should be claimable as a capital loss, but I think it's too complicated a situation for a forum.

 

Regards,

Adam

Community Support

Replies 0

Hi @paryanister

 

Thanks for your first post into our community. @MCA_Accountants are certainly taking you in the right direction so thanks Adam.

 

As to how you would understand this see Elements of the cost base and reduced cost base. It will show you what's involved in calculating a CGT Loss and what is included in Element 5 of the cost base. It would be reported at Question 18 Capital Gains on the return however depending on yourself as Adam says you may find it easier to use a Tax Agent.

 

Hope this helps

Kind Regards
MarkA