Income Tax Act 2007 section 121

How relief works

Section 121 explains the mechanics of how property loss relief against general income is deducted, including the order in which deductions are applied and what happens when losses are not fully used up.

• The eligible loss is first deducted from net income for the tax year specified in the claim, subject to caps on the amount that can be deducted
• If the loss is not fully used, and the taxpayer makes a separate claim for the other available tax year, the remaining loss is deducted from net income for that other year
• Any loss still unrelieved after both steps is carried forward under section 118 and set against future property business profits
• Where two property loss claims both target the same tax year, priority is given to the earlier claim — that is, the one relating to a loss from the preceding year