Which of the following properties owned by Scoop would be classified as an investment property? A. A property that had been leased to a tenant but which is no longer required and is now being held for resale B. Land purchased for its investment potential. Planning permission has not been obtained for building construction of any kind C. A new office building used as Scoop’s head office, purchased specifically in order to exploit its capital gains potential D. A stately home used for executive training
Question
Which of the following properties owned by Scoop would be classified as an investment property? A. A property that had been leased to a tenant but which is no longer required and is now being held for resale B. Land purchased for its investment potential. Planning permission has not been obtained for building construction of any kind C. A new office building used as Scoop’s head office, purchased specifically in order to exploit its capital gains potential D. A stately home used for executive training
Solution
The property that would be classified as an investment property owned by Scoop is:
B. Land purchased for its investment potential. Planning permission has not been obtained for building construction of any kind.
This is because investment property is property (land or a building, part of a building or both) held by the owner or by the lessee under a finance lease to earn rentals or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes or sale in the ordinary course of business. Therefore, the land purchased for its investment potential fits this definition.
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