So (thinking ahead a bit to the 2023-2024 tax return) we each have a chunk of our gains being hit for 28% ('cos that's the higher rate on "residential property" - see e.g https://www.gov.uk/capital-gains-tax/rates )

However it seems to me that it's well worth crystallizing any losses we can to defuse that. e.g if I have a beaten up bond fund with a £10k loss on it and dispose of it, that saves £2800 in tax on the property gains (or does it? see below).

The alternative would be to just sit on the £10k loss for now anticipating using it to offset some other gains in future... but then they'd only be worth £2k in tax relief even at higher rate.

So it seems to me to be a complete no-brainer to flog off every holding that's underwater and crystallize every loss we can because (not having another spare property to sell) we'll never have the opportunity to get such good value from those losses again.

But... I'm a bit suspicious that any time something looks like a no-brainer I'm misunderstanding something. For one thing it seems odd that assets which are "only" taxed at 20% on gains can have their losses used to counterbalance gains on assets which attract 28% tax on gains. So: how does the calculation actually work?

Is it more like (just considering the "big end" of the gain here)

- £50k of property gains taxed at 28% less £10k of bond fund losses is £40k of gains taxed at 28% (tax due £11.2K c.f £14k if the loss wasn't used... saving £2.8k)

or

- £50k of property gains taxed at 28% = £14k tax due less £10k of bond fund losses relieved at 20% = net £12k tax due (saving £2k vs. not using the loss).

or something else?

(This is sort of echoing my earlier comment about the fungibility or not of different "types" of gain/loss taxed at different rates... I really don't understand how it works. Any ideas?)

A bit too amazing. That was a fat-finger error. The actual return on the price was 8.2%pa (then yield was in the range 0-4% on top of that after expenses, falling over the years).

In fact if the original price paid had actually compounded at 17.6% for 27.6 years, we'd have sold it for a mid seven figure sum instead of the six it did.

Another data point on the "fungibility of losses" thing: I went back and revised the submission, adjusting the PRR slightly downwards (dates I'd used were slightly out) but also claiming some OEIC losses crystallized earlier in the tax year (I hadn't bothered including these on the first submission). Looking at how that changed the CGT liability it's clear the OEIC losses have reduced the gains taxed at the 28% rate by the full value of the loss, not some lesser amount.

So, there will be some PF churn over the next couple months as remaining losses worth the hassle (mainly on bond and multiasset income funds hit by interest rate rises) get crystallized... and then some more given some of the things I'll sell are things I'll want to buy back after the requisite 30 days have elapsed. 2023-2024's tax return is going to have quite a fat CGT attachment.