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21 June 2011
Issue: 4309 / Categories: Forum & Feedback , VAT
A couple sold part of their garden to their limited company which constructed a house on it. The company has been unable to sell the property and is letting it and claiming loss relief on its reducing value

Our clients a husband and wife decided to separate a plot of land from their extensive back garden and set up a limited company to purchase the plot in May 2007 and build a house on it to sell.

The company spent approximately £248 000 (including the cost of the land) in the first period of trading and we valued work in progress at 30 April 2008 at £250 000 to give a minimal profit.

Unable to sell the property the clients decided to let it on short-term six-monthly lets at approximately £900 per month from 1 February 2009.

In the accounts to 30 April 2010 work in progress was revalued at £240 000 and we claimed the £10 000 reduction in value as a trading loss to set against the rental income received.

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