A client of mine has setup a company solely to house an investment property (part residential, part commercial) and I am keen to get the reporting correct.
During this year the client has purchased the property and spent around £10k on what I would describe as capital improvements if I was looking at it from a sole trade residential letting point of view but I am not 100% sure how to proceed with the limited company.
SSAP 19 says that the property should be included at its open market value so would I be correct in capitalizing the improvements and then running any changes in value through the reserve as normal or should any improvements be written off to P&L? Presumably repairs can be written off in the normal manner
I am also aware that with FRS 102 lurking around the corner there may be a benefit to adopting the Micro Company regime in order to avoid having to revalue the property each year, what is the current accounting opinion on this route?
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Nothing about the the treatment of the expenditure changes because the property is owned by a company, or because the company is accounting for it as an investment property.
If it's capital expenditure you capitalise it. If it's revenue expenditure you write it off.