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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4973
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Due to the annual rent of one of my commercial properties

Customer Question

due to the annual rent of one of my commercial properties decerasing by over 40% can I write down the capital value of the property adn is this offsetable against profits. The property is held in an LLP.
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your question. As the other expert does not appear to be around, are you happy for me to answer it for you.

Please advise.

Many thanks

Customer: replied 1 year ago.
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply.

Accounting standard FRS 11 deals with impairment of fixed assets including tangible fixed assets.

More information on this is covered here

https://frc.org.uk/Our-Work/Publications/ASB/FRS-11-Impairment-of-Fixed-Assets-and-Goodwill-File.pdf

A devaluation in financial accounts does not necessarily mean that the reduction is offsetable against profits for tax purposes.

You would be able to offset the reduction when the property is eventually sold and then it would be a capital loss and fall within CGT and not income tax as profits of LLP are taxed under income tax rules and capital gains/losses under CGT rules.

I am sorry if this is not the news you were expecting.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

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