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Investment property or asset

I started a limited company with a view to renovating property and then selling. With the property market feeling poorly it made more sense when it came to decision day to rent the properties rather than sell. I have two like this.

I have also bought land with derelict buildings which are to be demolished and new houses are to be built.

Are the properties trading assets or investment property ?

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13th Jul 2012 15:10

or stock

When you acquire the properties with a view to renovation and resale they are trading stock.  The same applies to the land with derelict buildings.

If, having renovated a building you decide that you are going to keep it to rent, it ceases to be stock and becomes an investment property.  You need to check the tax rules relating to the value at which this transfer is done - my first instinct is that it must be done at market value at the date of transfer, but I'd want to check that.

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By Andm
13th Jul 2012 17:04

Stock

Thanks for that.

Should maybe have mentioned that the medium to long term plan would be to sell, if the market is right, in 4-5 years. Would that have any affect on your answer?

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By MBK
16th Jul 2012 13:43

I'm not the original poster, but...

... it should do.

If you purchase as stock then teh properties remain as stock all the time you are temporarily letting them to defray expenses etc but with the intention of selling them when the market recovers.

You will need evidence to support this if the taxman should come calling.

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