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Where Taxpayers and Advisers Meet

Writing back capitalised interest.

pawncob
Posts:5089
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex
Writing back capitalised interest.

Postby pawncob » Mon Mar 28, 2022 11:23 am

A development partnership has taken many years to complete and sell the properties, and during that time interest due to the partners on finance provided has created large losses for tax purposes.
The partners now wish to to forego the interest due to them, which has been added to their loan accounts. This will create a profit in the final year which they can nullify by using the accumulated losses.
The capitalised interest has been included on the partners' tax returns, and minimal tax has been paid on this, which they are quite happy to accept.
As far as I can see, this is just an accounting exercise with no tax implications, but I'd love to hear other opinions.
With a pinch of salt take what I say, but don't exceed your RDA

Return to “Income Tax”