Readers’ forum: Claiming exchange rate loss in UK tax return

13 January 2025

Issue: 4968 / Categories: Forum & Feedback , Capital Gains , International , Land & property , Losses

US property

A UK resident client had acquired a residential property in the US with a US mortgage. The acquisition price was $1.5m and with a mortgage of $1m. At the time of the acquisition in 2019 the exchange rate was £1 = $1.5. The property was sold for $1.5m in 2024 when the exchange rate was £1=$1.2 when the mortgage was also redeemed. Overall the client provided £333 000 funds for the acquisition and received back £417 000 on disposal after redeeming the mortgage thus having a net gain of £84 000.

The acquisition cost for the CGT pages of the UK tax return is £1m ($1.5m divided by 1.5) and the disposal proceeds in sterling is £1.25m ($1.5m divided by 1.2) showing gains of £250 000. How is one supposed to claim the exchange loss suffered on settlement of the forex mortgage?

Query 20 448 – Fogg.

Liabilities...

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