Land can be rented out after being acquired

Which part of a property is rented out?

The part that is rented out is investment property If the portions cannot be sold or leased out separately, the property is investment property only if the owner-occupied (property, plant and equipment) portion is insignificant.

Can a property company acquire a vacant block of land?

At the opposite end of the spectrum to Error 5 above, a property company may acquire a vacant block of land or property (commercial property or residential units) with a view to renting these out under one or more operating leases. land held for long-term capital appreciation rather than for short-term sale in the ordinary course of business.

What if a land has not been legally transferred?

If the land which has not been legally transferred/ in a process to transfer (considering all possible legal terms) in the name of the entity then it could either be Operating or Finance lease assuming that the entity has got right to use such lands based on the other classification criteria which defines operating or finance leases.

Is a rented property an investment property?

Despite the definition of ‘investment property’ specifically including property held to earn rentals, if the intention from the outset is to sell a property in the ordinary course of business, the fact that it is being rented out while the property is being marketed does not automatically mean that it is an investment property.

What if a land is expected to be sold in the long term?

The land expected to be sold in the long term may be investment properties recognized under IAS 40 or non-current assets held for sale under IFRS 5. For a non-current asset to be classified as held for sale, it must meet all the requirements established in paragraph 7 of IFRS 5. That the asset is available for immediate sale.

Are rented properties accounted for separately under a finance lease?

If the owner uses part of the property for its own use, and part to earn rentals or for capital appreciation, and the portions can be sold or leased out separately under a finance lease, they are accounted for separately. The part that is rented out is investment property