Rents received in the P&L ??
A property management limited company derives rents from commercial clients in two scenario's :
1) lease agreement between company and clients and between company and landlord
2) lease agreement between landlord and clients
In (2) above the company is simply collecting the rents on behalf of the landlord and paying this straight across. Sometimes a surplus is retained a surplus on rents collected but essentially the company charges the clients an admin/mgt fee for this facility.
In (1) above the company charges the clients rent receivable in excess rents payable to the landlord under there own arrangement/lease agreement. An admin/mgt fee may or may not be charged in addition but fundamentally the profit is derived from the net surplus rents received.
The question therefore is how should this be displayed in the P&L ?? I am assuming that in (2) the income is not reported in the P&L as it is technically not trading income of the company, however in the event of a net surplus can this be combined with the rents received in (1) or are they required to be reported separately in the P&L ??
Note that I am NOT netting-off the rents receivable and payable derived from (1), as this I consider to be trading income and cost of sales of the company.
A little bit complex but hopefully I have made myself clear.
Any advise greatly appreciated.
- Are you going to Tick and Bash on 21 May? 1,846 52
- Hello 335 2
- Sage 200 question 81 1
- Spanish Assets taxation - UK Residence 79 2
- Ltd Co and Fully Paid Shares 122 5
- RTI and Advances to Employees 137 3
- Sorry - another PPR question 194 4
- Private company division 303 5
- New build property to be rented 112 3
- Outstanding Loans 207 3
- Networking 858 7
- Allocation of income from property 623 22
- Services by BVI Company for UK Company 104 2
- bookkeeping system 478 7
- Sharing ODBC Excel Pivot Tables over network 116 2
- Company car in the LLP 133 1
- 64-8 problems 334 4
- flat rate scheme 1,871 37
- Are any of you members of The Institute of Financial Accountants - Accountnats certificate 883 11
- PPR relief - deemed residence? 327 9