By Cleona Kinahan M.Sc CFP® QFA FLIA
Did the Property crash in 2009 affect you? Have you suffered CGT losses in the past that you have forgotten about? Have you ever crystalised a loss on bank shares? Or any shares for that matter? Offset your investment losses against current gains to reduce your tax liability. How do you offset your investment losses against CGT?
For so many clients, these investment losses are just a reminder of bubbles or busts, or a time when the financial world fell apart. However, such investment losses can represent a real opportunity to save yourself Tax NOW! Tax is likely to be your biggest expense, but you can learn how to control it – OK so what am I actually talking about?
There is a provision to offset losses against gains in order to reduce your CGT bill. There is no time limit on carrying forward CGT Losses that an investor suffered against CGT Gains. Losses suffered on foreign property also can be counted.
Why am I telling you this now?…
Clients are continuously looking for opportunities in which to invest their money. One of the first questions we get asked when people are looking to invest is how the gains are taxed? For the majority of products, it’s at 41% (Exit Tax). When we dig a little deeper with clients they start to tell us about their previous experience of investing or that time they ‘dabbled’ in shares, that’s when the subject of losses arises. Then the conversation becomes a bit more interesting.
At O’Leary Financial Planning we can advise on a variety of Investment products – many of which are liable for CGT rather than Exit Tax – BINGO!!!! Clients’ eyes start to light up – finally, there is a way to claw back some of the financial loss they may have experienced in the past. By investing now in a CGT ‘product’ any gains they make on their investment can be offset against any previous losses, thus a ‘saving’ of 33%.
Taxation on investment products
This is only one consideration when deciding where to invest your hard-earned cash. Here at O’Leary Financial Planning, we look at your entire situation, tolerance and attitude to risk, reasons for investing, and time frame before advising you on a suitable plan. Sometimes leaving money in your deposit account is the best option for you but at least this decision will be as a result of a conscious, well-informed, and thought-out plan not because you just haven’t gotten around to talking to anyone about it!