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Investment property Depreciation and borrowing

Investment property

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A residential building used for long term rental accomodation, purchased with a bank loan. 

1. Do you depreciate?

2. Do you capitalise the borrwing costs?

3. Do you report as a tangible fixed asset or do you display sepatately as investment property. FRS102 Section 16/17 suggest it's a fixed asset? 


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09th Apr 2019 11:30

If it's a property that will be rented out, it's an investment property. Initial recognition (i.e. at purchase date) will be at cost, then revalued to market value at each subsequent balance sheet date. Valuation can be by the Directors and does not need to be third-party.

Arrangement fees on any mortgage are set against the proceeds of the loan and amortised over the period of the loan.

Thanks (1)
By Tickers
to Mike Bath
09th Apr 2019 13:25

Thanks but what do you mean by "set against the proceeds of the loan"

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09th Apr 2019 15:29

The debit for the amount of the arrangement fees goes against the mortgage creditor balance.

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