Impairment Losses Disallowed For Tax Purposes

The Government has proposed a new bill, as from January 1st that may enter into drive retroactively, 2013, that may disallow the deduction of Impairment losses of investments in subsidiaries, once transferred by the Parliament. Currently, the investment in a subsidiary, either domestic or foreign, must be tested for impairment every tax period.

If the tax basis of the subsidiary for the mother or father company exceeds the net asset value of the former, a taxes deductible reduction can be claimed by the second option. This tax deduction is self-employed from the accounting reduction that eventually the parent may have authorized in its books. For accounting purposes the impairment is ruled by IAS 39 which basically compares the carrying amount of the sub and the present value of expected future cash flows discounted using the current market interest rate.

  • Employees and Independent Contractors
  • Borrowings (Leverage) and Cash Management
  • 36% Vanguard Total Stock Market ETF (VTI)
  • For the 2nd part of the Escrow Amount, lets just suppose only 5% is released after 18 weeks
  • Expenditure by father on marriage of his daughter
  • Pay Medical Bills
  • ÷ Initial Capital Investment

To avoid dual computation of loss, once at the subsidiary level and again at parent company level – indirectly through the impairment reduction- the new expenses just disallow the tax deduction of each impairment loss derived from investment in subsidiaries. As a result, the loss at mother or father company level is deferred until de sub is wound up or sold. In order to avoid aggressive tax planning, several anti – abuse measures are followed. For instance, losing motivated by the sale of a company to other group company is also deferred until that company is eventually sold to an authorized not belonging to the group. Obviously the reversal of impairment loss of previous years will not be taxable.

If you choose to do happen to deal with the place yourself, do the right contact and thing your tenants every few months to ensure they don’t have any concerns. A simple email will work. Weekly and make unannounced visits Don’t call them. You should honor their privacy, but let them know you’re available if they have any issues.Before tenants move around in, make sure the hot water and heating and cooling systems work well.

If your local rental is a residence, get a professional home inspection before you rent it to fix any urgent repairs. When IN THE EVENT YOU Consider Investing in a Rental Property? Okay, I must say i want you to listen to me noisy and clear here, people. You should be debt-free before you think about buying a place to rent.

You should also have a completely funded emergency account, this means 3-6 weeks of expenses covered. Having a crisis fund when you’re a landlord is especially important because of unstable events like maintenance, missed rent or intervals in between renters. And like I said earlier, being able to pay in cash is paramount to funding any real estate deal.