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a question uses the term “derelict building” to describe a building which is bought, renovated and sold.
in the taxable trading profits, the cost of the renovation is treated as an allowed expense.
i wd have assumed a derelict building is unusable, thus the expense is disallowed.
cd u please comment on it
thanks
If it is renovated immediately or intially when the building was bought and it reduces market value , as the building was in an unusable state then this is a disallowed expense , wheter only repairs , specifically that are not carried out initially are treated as Revenue expenditure
You are confusing how you deal with the purchase of a capital asset for use within the trade and the “repairs” expenditure you then incur with what I believe is in your example a very different situation.
In this example the entire transaction should be dealt with as a trading item – the property has been bought not for use within the trade but to be sold at a trading profit therefore I would expect all the costs incurred to be deducted as expenses from the sale proceeds to establish a trading profit. This is a trading transaction not a capital purchase
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