Luca L.

Good afternoon, does anybody have an opinion on the above queries?

Good afternoon, in 2017 I purchased a property in Italy. I used it as an Airbnb for 5 years and cashed in the rent. I also did some internal renovations. The income had been regularly declared both in Italy and in the UK and taxes had been paid in both countries according to local law. in 2022 I attempted to sell the property. Right before the exchange of contract the solicitor and the notary found an old survey on the property that deemed it unsellable and inhabitable. The fault falls on the solicitor in 2017 who never should have transferred the deed to me. As I was unable to proceed with the sale, I found myself liable to damages according to the Italian law for 38K which I paid and a settlement agreement was signed with the (now ex) buyer's solicitor in early 2023. I then sued the previous owner of the property who took responsibility for the error and offered to take back the property and give me the money I paid in 2017 The only way to proceed was to transfer the property through a judge who ruled a "deed nullity" in February 2024. The money was transferred to me shortly after and the deed signed in 2017 was deemed void. Now the questions are: - Can the 38K settlement agreement for damages happened in 2022/2023 be an allowable expense for CGT purposes? - Can all the solicitor fees I incurred for the deed nullity ruling be as allowable? - The disposal was infact a deed nullity, not a transfer or a sale, destruction or a gift. Does this change anything for CGT purposes? - As I was renting the property, using the property as a business, cashing in the rental agreement and paying taxes as every owner would do, can this be classified as beneficial ownership for CGT? In short, I incurred in a loss, but what can I really claim as allowable expenses? Thank you in advance for your kind reply.

Thanks a lot, very precious information. Just to clarify, also the damages I payed the potential buyer that I was taking about, can be considered a loss as they incurred during a disposal? (Or at least when I was trying to dispose) Once again thank you for your service

Hi and thank you for your reply. I have owned the flat for 12 years and rented it out for the majority of the time. Income has always been added to my self assessments both in Italy and the UK. When I was trying to sell it 2 years ago, the notary found an old assessment by a tribunal that deemed the property inhabitable and unsellable. The mistake was made by the notary who never should have countersigned the deed and authorized the transfer of ownership. Furthermore, the previous owners recognized the mistake and agreed to take back the flat, giving me back the money I spent. The ownership can be transferred only by a judge who needs to rule a “deed nullity”, the most appropriate for this case. This should be ruled in a few days and so should be the money transfer . Would all these incidental costs be considered a loss? As the previous owner is giving me exactly the same amount I spent, the loss would be solicitor fees and stamp duty plus a small fee for my lawer. Is this correct? Another related problem is the following: When I tried to sell the property a deposit was paid to me by the buyer and an exchange of contract was signed. As I said before, I found myself unable to proceed with the sale and therefore liable for damages . We settled for an amount that was way lower than what I should have paid. The settlement was countersigned by a solicitor and everything has been paid during the PREVIOUS tax year. As I’m disposing of the property now through a deed nullity, can these damages be considered a loss? Obviously the previous self assessment should be amended. Again thank you for your answer and for your patience so far

Thank you for your answer. Can a nullity verdict be considered as a disposal? It’s not a normal sale, or a gift or a distroyed asset. The judge will simply return the property to the previous owner as the deed, signed back then is null Can I treat this property as any other one in terms of CGT calculations?

I will dispose of a property abroad within the current tax year. For an error occurred during the purchase the disposal has to be ruled by a judge in Italy through a “nullity of the deed” verdict. The property will go back to its previous owner who already refunded me of the original purchase price. However I have incurred in several expenses (attorney for exemple) that would create an overall loss. Could I offset this loss against the gain of this year even if it’s an unusual disposal (deed nullity)? Thanks

1) Are the last 9 months deemed occupation for PRR applicable for properties abroad too? 2) the only tax year where I’m uncertain about the 90 nights rule for PRR is 2015/2016. How could I check that, is there any way at all? SARU services only go back 5 years