IFM23100 - Real Estate Investment Trust : Entry to the regime: effects of entry: capital losses from pre-entry periods: CTA2010/S541

The tables below and at IFM23105 and IFM23110 set out the position for utilising losses etc arising in accounting periods up to the date the REIT rules first apply and which have not been offset against other profits of pre-entry accounting periods, either in the same company or surrendered as group relief.

For single company REITs, the table applies to the company. For Group REITs, the table applies to each company that is a member of the group at the date it joins the regime. It also applies to pre-entry losses etc for companies that join a Group REIT after the group has joined the regime.

The tables refer to the activities of the pre-entry company, the property rental business after the regime first applies to it and the other taxable activities in that period as the residual business.

References to a ‘qualifying’ property business means activities that come within the definition of ‘property rental business’ as set out in CTA2010/S519. The disposals in question are those which took place in accounting periods before the company or group became a REIT, where the losses arising have not been utilised in accounting periods before entry.

Table 1: capital losses

Disposals of assets that were involved in	Type of loss etc	Can be used against
Qualifying UK property business	TCGA1992/S8(1)(b)	Chargeable gains of the residual business regardless of the use to which the asset was put before disposal
Overseas qualifying property business	TCGA1992/S8(1)(b)	Chargeable gains of the residual business regardless of the use to which the asset was put before disposal
All other activities	TCGA1992/S8(1)(b)	Chargeable gains of the residual business regardless of the use to which the asset was put before disposal

Other capital losses	Type of loss etc	Can be used against
Losses on deemed sale and repurchase of assets involved in property rental business.	TCGA1992/S8(2)	Losses are not allowable since gains are not ‘chargeable’ (CTA 2010/S536(4))

See IFM23105 and IFM23110 for Tables 2 and 3: trading and other losses, expenses etc.