Accounts / Tax on Property Sale

Accounts / Tax on Property Sale

Didn't find your answer?

I would be very grateful for an opinion on this.

Company bought house with view to Rent and / or renovate and sell for a profit.

Last Accounts have 3K losses b/f and were entered on the CT600 as Schedule A losses.

In the last Financial Year the property was sold for 88K and there has been no Rental Income.

There is a profit on the sale of 23K which is calculated as ; Sale Price less Purchase price plus cost of renovation.

This, as I’m concerned, is a Trading Company for tax purposes.

Question 1

Would the P & L show Turnover as 88K and COS as 65K. Gross Profit 23K. Or would the Turnover be nil and the 23K shown as a Gain on Asset Disposal.

Question 2

On the CT600 is it OK to show the Schedule A losses in box 4 as Trading Losses brought forward. Obviously I don’t want to lose the off-set of these losses against the Taxable Profit for this Financial Year.

Many thanks in anticipation.

JOHN R

Replies (2)

Please login or register to join the discussion.

avatar
By J.R.BOX
25th May 2007 00:09

Thanks Nicholas
Thanks for the pointer on Box 26. For the past two years the Company has been in existance returns have been made on the Short Version - no box 26.

I propose to treat the Sale Proceeds as Turnover because there'll be no CGT calculation. Then show the chargeable profit for this year in Box 11. The b/f loss in Box 26.

There's no other revenue so Starting Rate for CT applies.

Hope this makes sense.

Thanks (0)
avatar
By carnmores
24th May 2007 17:26

what was the intention at the time
it seems that there was an investment element here anyway ie the rental. is this the first of many. just because there has and will be only 1 property does not preclude the possibility of trading

why are you worring about trading if the tax may be less if the starting rate is available the differential may not be that great.

it is also possible that the company genuinely hanged from investment to trading in year.

all income based trnsactions are sch A so you can use them against any other property income. all entries should be in the sch a box ie box 26 on main form

Thanks (0)