Capital loss on death

Hi,

I'm preparing a 2023 tax return for my late mother who passed away in January this year. She was widowed (pre-deceased by my late father).

She owned apartments which were sold at the end of 2022.

I note from her form 11 that the "Capital Gains" section shows a significant loss following the sale of the apartments.

She owned her PPR outright.

Other assets mainly cash e.g. credit union, state savings, bank a/c. She held a very small number of shares (from eircom days). So not capital gains in past number of years.

Grant of Probate has not been submitted yet. Is there any use that the capital losses can be put as part of the probate process or are the losses now redundant?

Any use?

No, the capital losses are of no use.

The capital losses are only of use in very limited circumstances where gains are made in the 36 months to death.

Gordon Gekko said:

The capital losses are only of use in very limited circumstances where gains are made in the 36 months to death.

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Hi Gordon

I know that this does not apply in this case, but what are these rules?

Is there a tax planning point around them?

Brendan Burgess said:

Hi Gordon

I know that this does not apply in this case, but what are these rules?

Click to expand...

They're summarised here and there's probably more detail in the accompanying further guidance documents linked from that page.

ArthurMcB said:

If you make a loss

This page is an explanation of how losses affect CGT

www.revenue.ie

Any use?

Click to expand...

Special provisions for capital losses following a death​

Losses cannot be set against gains for earlier years except where those losses are made in the year of death.

In the year a person dies, losses made by them might not be able to be set against gains in the same year. These losses can be deducted from the gains of the previous three years.

OK, so if I make a loss of €20,000 in 2024 and die in 2024.
I made a capital gain of €30,000 in 2021 and paid €10,000 CGT.
My executor can set the €20,000 loss against the gain and get a refund of €6,666.

It seems overly generous in my view. Gains disappear on death anyway so I fail to see why a gain that happens 2.5 years before death should be sheltered by a loss in the year of death. I don’t see the logic.

Why expect logic in a tax system?

It might start off on a logical basis, but then tax nooks and crannies get added as people clamour for tax incentives and exemptions

It's most probably a relic of a long-forgotten hard case.

Equally probably, the numbers availing of it are tiny to non-existent.

OP here.: Thanks for replies and this confirmed what I had suspected.