I have a client who bought a property, renovated and now is planning to sell. The whole project took a few months. I already established that it would be treated as trading rather than investment.
What would be the accounting treatment in this case? I would record cost of purchasing the house as cost of sales since it's not staying within the business (so not an asset). Please correct me if I am wrong.
When selling the property can we deduct the full costs of renovation? No extention to the house was build, just renovation plus new bathroom was created.
And what about VAT when selling the property? Currently the client is not Vat registered.
Any help very appreciated
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What would be the accounting treatment in this case? I would record cost of purchasing the house as cost of sales since it's not staying within the business (so not an asset). Please correct me if I am wrong.
Sounds good to me.
When selling the property can we deduct the full costs of renovation? No extention to the house was build, just renovation plus new bathroom was created.
You certainly can.
And what about VAT when selling the property? Currently the client is not Vat registered.
No VAT to pay.
Agree with all that and would add that this will be a VAT exempt sale. Registration isn't a choice here.
Or, at least, it isn't if this is going to be his trade.