A client has built a block of flats it cost £1.5m for the land and £2.7m to build there are 12 flats which have now all been sold but the freehold remains in the compnay - what part of the cost is retained in the company representing the freehold and how is this shown in the accounts - stock ? FA investment ? something else ?
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How long are the leases for the flats? Is there any ground rent due?
If e.g. 999 year leases and a peppercorn rent I'd probably retain about £1 as a FA investment.
https://www.gov.uk/government/publications/land-and-leases-the-valuation...
Above link is re CGT, but is CGT on point, could this be trading income?
The answer is in the question (well almost)!
£1.5m - investment property, but then it should always have been there whilst the £2.7m build cost went into WIP assuming the intention was to retain the freehold.