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Some years ago, my company purchased a property with a view to reselling it shortly thereafter. Unfortunately, a suitable purchaser could not be found and the property has instead been let out for a period of years. The previous accountant showed the property in the company accounts as trading stock.
It has now been suggested to me that this may not be correct and that the property should be shown in future accounts as a fixed asset. My concern is as to the possible tax or other implications arising from this.
Readers' advice would be very welcome.
Some years ago my company purchased a property with a view to reselling it shortly thereafter. Unfortunately a suitable purchaser could not be found and the property has instead been let out for a period of years. The previous accountant showed the property in the company accounts as trading stock.
It has now been suggested to me that this may not be correct and that the property should be shown in future accounts as a fixed asset. My concern is as to the possible tax or other implications arising from this.
Readers' advice would be very welcome.
Query T17 038 - Developer.
Reply by Thicket:
Often it may not be clear whether a property transaction is to be treated as an investment or a trading transaction. The underlying motive for the acquisition of the property is often the determining factor - and this may not be clear. If...
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