Share this content

Freehold land and buildings in company accounts

What to include as the cost

Didn't find your answer?

Besides the actual cost of the freehold land and buildings how should other incidental costs of acquisition such as stamp duty, solicitors fees, valuation fees etc be treated?  Should they be added to the cost or written off in the p&l account?  If they are added to the cost are they assumed to relate to the buildings element and depreciated or to the freehold land? If written off in the p&l account I assume that they would have to be added back for corporation tax but not lost sight of as they should be allowable against any gain in the future as incidental costs of acquisition.  The bank also charged the company a loan setting up fee of £2,400 in connection with this acquisition which I think should be written off in the p&l account but would it be allowable as a revenue expense for corporation tax? The asset is used mainly for business purposes although there is a small part that is being converted into a flat and will be rented out.

Replies (5)

Please login or register to join the discussion.

By johngroganjga
06th Feb 2019 07:45

They are capitalised. You then need to split them between the land and the building for depreciation purposes.

Thanks (0)
By lionofludesch
06th Feb 2019 10:12

They're part of the cost of buying the asset.

The bank charge is connected to the loan, not the asset it finances.

Thanks (0)
Hallerud at Easter
06th Feb 2019 10:25

The bank fee re arranging the bank loan ought to be written off over the loan term, so carried as a prepayment and released each year, the cost for tax will be a NTLR Debit.

Edit -sorry- in part a NTLR Debit, as both business use and letting re flat so will likely need apportioned, as will interest.

Thanks (0)
By lendainty
06th Feb 2019 12:31

Thank you so far for your comments .They have been very helpful.
Please excuse my ignorance but what does "NTLR" mean?

Thanks (0)
Replying to lendainty:
By lionofludesch
06th Feb 2019 12:52

I vote Non Trading Loan Relationship.

Thanks (0)
Share this content

Related posts