European

Thank you. Both my name and my wife’s name appear in the house documents, but it was bought with my money (from my mother’s inheritance) and the proceeds of the sale came to me. Am I allowed to declare the asset as solely mine, which would allow me to offset the theoretical gain against a previous loss?

I bought a property in Europe in 2007 with Euros I received in an inheritance. I sold it in 2024 at a loss. I understand HMRC expects me to convert the currency to Pounds using a “reasonable and consistent method”. In practice, this seems to have been interpreted as having to use the exchange rate available at the time of the acquisition and a different rate at the time of disposal, even if this results in a spurious gain or loss due to exchange rate fluctuations. In my case, this method would turn my actual loss into a fictitious gain, liable to tax in the UK. Given that I did not convert Pounds into Euros in order to buy the house, and therefore did not benefit from the fact that Euros were cheaper at the time, it seems perverse that HMRC should tax me for my foreign capital loss, particularly if the relevant European tax office sees the transaction as a capital loss. I would not regard such methodology as “reasonable and consistent". Is there an acceptable alternative?