SSAP19 Investment Property Annual Valuation Loss

SSAP19 Investment Property Annual Valuation Loss

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I have a client who have one property which is defined as a property investment company.

They bought a property in 2007 for 380k. The last financial year end Jan 13 the property had an independent valuation at £310k.

Since 2007 to 2012 the valuation has always been at 380k but the directors have come to agree with the recent economic downturn and with planning on the property turned down they believe the market valuation to be correct.

The company has no revaluation reserve surplus and I understand this would be shown as a loss in the P&L.

 

I would ask How would this be shown in the statutory accounts and would the 70k loss be treated as a normal expenses in the P&L for corporation tax calculations?

 

Any help on this would be greatly appreciated.

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By Democratus
21st May 2013 15:43

Temporary or Permanent

If it's a temporary write down, or part of it is this can be shown on the STRGL, otherwise it's a P&L writedown. Simple as that i believe.

 

Tax not my thing but wouldn't the building have capital allowances so the tax wd value is not related.

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By johngroganjga
21st May 2013 15:47

Unrealised revaluation deficit is not allowable for tax.

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By Robert K
21st May 2013 15:52

The £70K movement would be

The £70K movement would be shown in the STRGL under the Stat P&L. Fixed asset note will show a revaluation of (£70K) and therefore Cost or Valuation/NBV at Y/E = £310K.

You will also have an Investment Property reserve of £70K debit on your balance sheet under Capital & reserves.

There are no available tax reliefs for this just as there would be no charge for a gain. In fact this should not be shown in your CT computations at all.

 

 

 

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Replying to DJKL:
By johngroganjga
21st May 2013 15:56

Unless ...

Robert K wrote:

In fact this should not be shown in your CT computations at all.

 

Unless it is charged in arriving at the profit before tax in the accounts, in which case it will appear in the computations as an add back.

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