Allowable Losses | The Biggest Mistake Irish Investors Make with Their Taxes

  • By: Walter Dunphy ACCA
  • Date: July 10, 2023
  • Time to read: 2 min.

In this blog post, we will highlight one of the biggest mistakes Irish investors make, which is not understanding how losses impact your taxes. Not understanding this could be costing you thousands of euro over your investing lifetime.

It is not uncommon to make a loss when you are investing, all markets go through cycles of booms and busts, and there may come a time when you will have to crystalise a loss by selling an investment that is down.

This is the point where people tend to make a mistake. After the loss has been realised, the investor completely forgets about it.

Did you know that you can carry forward a loss on an investment indefinitely and then offset it against future profits you make on other investments, thus reducing your future tax liabilities? Many people completely forget about this and end up throwing more money down the drain.

For example, if you made a loss on crypto of €3k. Then this loss can reduce future tax liabilities by €1k (€3,000 * 33%).

This loss is not ringfenced, if you made a loss on a cryptocurrency investment, this could be offset against future profits on stocks, or even property.

By completely forgetting about a loss you have made, you are assuming you’ll never make a profit in the future to offset it.

What should be included on your CGT return and when?

How do you stay fully compliant with your CGT returns? (Full CGT Guide) Well, you don’t need to do a CGT return in a year when you only have a capital loss, but it will be very important to keep very good records of this loss for future returns. (As per Revenue Guidance)

You can still submit a capital gains tax return in a situation where you have made a loss, which may make make things more straightforward to track if you so wish.

Disclaimer: This blog post is for informational and educational purposes only and should not be construed as financial advice.

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