Property developer no sale achieved

Property developer no sale achieved

Didn't find your answer?

Linked heavily to my question re losses recently.

An individual buys a property with a view to obtaining planning for the site to knock down the existing dwelling and build a bigger one for resale in a very exclusive area.

Property is purchased with mortgage, planning obtained. Site is left dormant for a while then the original house is partly demolished. Simultaneously the bank pull his borrowing facility and he has all on to avoid bankruptcy. Work on the site ceases and eventually a repossession occurs.

The intention was to trade but really unsure whether actual trade exists here. I've looked briefly at the badges of trade but would appreciate a bit of feedback please.

Property was purchased in 2009. Repossession in 2014.

Replies (9)

Please login or register to join the discussion.

avatar
By Ned Ludd
28th Jun 2014 18:26

Should add
This is the only property transaction in his own name. Every other transaction is via a limited company.

This was purchased in his own name as the area is extremely sought after (professional footballer type area) and borrowing at that time was easiest arranged personally.

We did actually include the transaction within the company initially on a bare trust basis with a note on the accounts supporting but on enquiry it was kicked out

Thanks (0)
By johngroganjga
28th Jun 2014 20:25

Question?
I think you have spent so much time setting out the background facts in detail that you haven't got round to your question.

Thanks (1)
avatar
By mikeyban
28th Jun 2014 20:56

I think he is saying is there a trade... ?

In my opinion no....

Therefore any loss is useless

Thanks (0)
avatar
By Ned Ludd
29th Jun 2014 02:50

Sorry
Haha. Sorry john the question is: is there a trade? (Well deciphered Mikey).

I did actually enter it in the tag line on my initial post but it doesn't show up.

Thanks (0)
avatar
By User deleted
29th Jun 2014 11:32

Ask yourself ...

... if the project had been successful, how would it have been taxed? Not necessarily conclusive, but a starting point.

Thanks (0)
avatar
By girlofwight
29th Jun 2014 20:15

I'm with BKD on this, look at what would have happened if there was a successful sale.

It sounds to me, on facts given, that a case for a trading loss could be established.

,

Thanks (0)
Replying to Wilson Philips:
avatar
By mikeyban
30th Jun 2014 07:12

But there wasn't?

girlofwight wrote:
I'm with BKD on this, look at what would have happened if there was a successful sale.

It sounds to me, on facts given, that a case for a trading loss could be established.

,

But there wasn't? Where is the trade?

Thanks (0)
By johngroganjga
30th Jun 2014 07:32

There was a trade. It just failed to achieve its objectives.

Thanks (0)
avatar
By MBK
30th Jun 2014 13:25

Exactly

There was a trade for sure. If you opened a shop in a high street selling apples and didn't sell a single apple that wouldn't mean you didn't have a trade. The only thing here is that there was only ever a single item to be sold.

And you could also readily argue that the repossession itself amounted to a sale - assuming it was in exchange for the debt being forgiven.

Thanks (0)