Loss and profit

A new client a limited company developed some residential apartments from scratch; that is the company purchased the land and built the properties on it. The company subsequently sold the residential units on the open market.

Due to the fall in property values between purchase construction and sale the company now has large losses.

There has been no trading for two years and the company is now proposing to purchase some run-down properties from a connected company. All of these rather dilapidated properties have been rented out in the past. The plan is that these properties will be renovated and then sold on the open market.

Can the losses from the earlier ‘new build’ be set against the profit that will hopefully be made when the renovated properties are sold?

We look forward to readers’ comments.

Query 17 913 – First Fix

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