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Three people purchased a commercial property and 75% of the cost was financed with a bank loan. Following lease changes, the rent did not cover the loan repayments, and the bank wrote off 30% of the loan on the condition it was refinanced
Three individuals jointly acquired a commercial property for a seven-figure sum of which 75% of the acquisition price was financed by a bank loan.
The property was let but on the renewal of the lease some years later there was a rent reduction and the rent generated was not enough to finance the existing loan repayments and interest.
After lengthy negotiations the bank agreed to write off 30% of the loan if the property owners refinanced with another financial institution which they did. Some time later the tenants wanted to move out and the owners applied for and obtained planning permission for residential development and sold the property to a developer.
A chargeable gain has been made on the acquisition price and a further profit has been made on the amount of the bank loan previously written off.
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