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Where Taxpayers and Advisers Meet

Sale of Property within a company

Matt15
Posts:22
Joined:Wed Aug 06, 2008 3:59 pm
Sale of Property within a company

Postby Matt15 » Wed Sep 16, 2009 8:18 pm

Our client has a property that they have bought for future development on the Balnce Sheet of their Ltd Co. Their profession is builders and developers. The property has fallen in value and in order to recognise this they are proposing selling the property to themselves (at market value) which will create a loss. However to further complicate this, they wish to only sell the house and part of the grounds and retain the rest of the grounds within the company for possible future development. Any comments or suggestions about the tax implications would be very welcome. Thankyou.

tom 7000
Posts:820
Joined:Wed Aug 06, 2008 3:30 pm
Location:Farnborough Hants
Contact:

Re: Sale of Property within a company

Postby tom 7000 » Mon Sep 21, 2009 9:10 am

I think the magic words are market value.....better make sure it is...

okevin
Posts:154
Joined:Wed Aug 06, 2008 3:41 pm

Re: Sale of Property within a company

Postby okevin » Tue Sep 22, 2009 9:25 pm

Assume that the co holds the property as stock for resale. This should be valued atlower of cost or NRV, this writ down will produce a trading loss. You can not just elect to sell to yourself (i.e. hold as investment property) if the intention is to sell to third parties. The property should remain in stock at the lower value. Problem solved, no need to be clever in this occasion.

Matt15
Posts:22
Joined:Wed Aug 06, 2008 3:59 pm

Re: Sale of Property within a company

Postby Matt15 » Fri Sep 25, 2009 10:44 pm

Thanks for reply - however they genuinely want to sell it to themselves as the potential for development has waned. The intention is to sell it to themselves and rent it out.


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