Section 120 — Income Tax Act 2007: Deduction of property losses from general income

Deduction of property losses from general income 120 1 A person may make a claim for property loss relief against general income if—

a in a tax year (“the loss-making year”) the person makes a loss in a UK property business or overseas property business (whether carried on alone or in partnership),

and b the loss has a capital allowances connection or the business has a relevant agricultural connection.

2 The claim is for the applicable amount of the loss to be deducted in calculating the person's net income—

a for the loss-making year, or b for the next tax year. (See Step 2 of the calculation in section 23.) 3 The claim must specify the tax year for which the deduction is to be made.

4 But if the applicable amount of the loss is not deducted in full in giving effect to a claim for the specified tax year, the person may make a separate claim for property loss relief against general income for the other tax year.

5 For this purpose “ the other tax year ” means the tax year which was not specified in the claim already made, but which could have been specified.

6 This section needs to be read with—

a section 121 (how relief works),

b section 122 (meaning of “the applicable amount of the loss”),

c section 123 (meaning of “ the loss has a capital allowances connection ” and “ the business has a relevant agricultural connection ”),

and d section 124 (supplementary).

7 See also section 127A (no relief for tax-generated losses attributable to annual investment allowance) and section 127B (no relief for tax-generated agricultural expenses) and section 127BA (restriction of relief: cash basis) .