Mike
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Post by Mike on Jun 24, 2015 23:52:57 GMT
P2P capital losses supposedly can be offset against income but I am curious to know when a loss is a loss?
Some loans (looking mainly at FC) have a closing (-esque) comment along the lines of "that's all folks" only to be resurrected some months later with some further news about recoveries. So two questions I am curious to know people's non-professional opinions on:
When is it acceptable to consider a loan in default as a loss?
When did the loss occur? When I decided it was a loss (some games could be played here)?
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Mike
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Post by Mike on Jun 24, 2015 23:59:11 GMT
A famous example of a loan I would consider a loss is 3032, after the following comment in September:
Which then six months later was updated (nothing in the interim) advising a non-zero estimate for recovery to unsecured creditors.
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upland
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Post by upland on Jun 25, 2015 5:36:56 GMT
I was surprised with FC how long the process takes , although I have no real experience on any other p2p site. One year my recoveries exceeded my losses and it was then that I started to appreciate that the timescales are long.
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Post by batchoy on Jun 25, 2015 7:32:36 GMT
A loss is a loss when the platform decides that it is no longer viable seek repayment from the borrower. The P2PFA has changed the definitions of non-performing, default and loss to make them pretty meaningless, I have loans in default which the P2PFA define as non-performing, and loans which the P2PFA defines as in default or lost which are in recovery. Up until now platforms have hidden losses by erasing failed loans from their sites, but all this is going to have to change with the proposed changes in tax legislation and they will have to clearly identify loans which are losses, keep the records live on their platforms and probably supply the information HMRC.
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Mike
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Post by Mike on Jun 25, 2015 7:41:11 GMT
A loss is a loss when the platform decides that it is no longer viable seek repayment from the borrower. Interesting. In the example I mentioned above, it appears as if in September the platform concerned would have deemed that loan a loss and no viable repayments were going to be made. So if that had happened, but a recovery was later made after the loan was deemed a loss by the platform, then this all starts to look like a big (expensive) headache for platforms...
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james
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Post by james on Jun 26, 2015 0:17:49 GMT
Recoveries from defaulted loans are routine and plentiful on some platforms. Some have even seen payments after bankruptcy though I haven't seen them mentioned after a DRO. The closest I've seen to a complete loss is where a consumer borrower changed address after a few months and the statute of limitations has now expired.
What interests me is the fate of loans that I sold in anticipation of default, taking a capital loss to do so. I'll probably declare the loss amount as the default value if there is eventual default and not if there isn't. Which of course requires the platform making that information available to me, the relevant one does.
The UK platforms will probably end up with some suitably friendly reporting of this sort of thing, given some time to get it into place.
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jonah
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Post by jonah on Jun 26, 2015 3:49:36 GMT
The UK platforms will probably end up with some suitably friendly reporting of this sort of thing, given some time to get it into place. Having a list of sites which actually do this might be very helpful, at least by the time of next tax returns. Does any site already manage this?
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pikestaff
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Post by pikestaff on Jun 26, 2015 6:32:13 GMT
P2P capital losses supposedly can be offset against income but I am curious to know when a loss is a loss? Some loans (looking mainly at FC) have a closing (-esque) comment along the lines of "that's all folks" only to be resurrected some months later with some further news about recoveries. So two questions I am curious to know people's non-professional opinions on: When is it acceptable to consider a loan in default as a loss? When did the loss occur? When I decided it was a loss (some games could be played here)? For individuals, capital losses cannot yet be set against income. Legislation has been proposed but we have not seen the draft legislation yet. My expectation is that the relief will be limited to loans made on or after 6 April 2015 but we will not know for sure until the legislation is published. As regards when a loss can be recognised, I expect this to be set out in the legislation as well. Until we have the legislation, the platforms won't know what to report. See also my post here p2pindependentforum.com/post/44515/thread and the rest of the discussion in that thread.
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