As indicated in the standard, land and buildings that are used to obtain rental income, capital appreciation (generation of valuations) or both, are classified as investment properties for accounting purposes.

Investment properties are real estate and, for this reason, also commonly called real estate; This type of property corresponds to land or buildings destined exclusively for rental or generation of appraisals. Said investment properties are found in the International Financial Reporting Accounting Standard

investment properties can use the fair value or cost-depreciation-impairment model, and it will be up to the organization’s management to choose the modality; On the other hand, in section 16, although the two models indicated above are also used, there is an important technical expression that must be taken into account, and that is that investment properties must be measured at fair value, but when by cost or disproportionate effort, they cannot do it,

Assets that can be measured as investment properties

As indicated in the standard, land and buildings that are used to obtain rental income, capital appreciation (generation of valuations) or both, are classified as investment properties for accounting purposes.

Under this definition, it is clear that not any good given for rent is an investment property. It is observed that only real estate, whether land or buildings, that the organization has destined to be rented and generate profits are considered as such; Said leasing activity can be carried out in whole or in part (a part of the property, or just an area).

Now, it is important to evaluate that the company that intends to register a particular asset as investment property, does not dedicate itself solely to the administration of assets that are delivered as a lease and that it receives all the income from said activity; in this case it is necessary for the company to engage in another activity, and to have such leasing businesses as a complement.

Therefore, the following are some assets that could be classified in the group of investment properties:

Land for undetermined future uses.
Building rented through operating lease.
Unoccupied building that is planned to be leased in the future through an operating lease.
Properties that are being built or improved for future use as investment properties.


Frequent questions….
How is it recognized? It will be recognized in the case of properties that are kept, by the owner or lessee, under a financial lease, to obtain income, capital gains or both.In the case of operating leases, it may be accounted for as investment property, only when the lessee can measure the fair value of the ownership interest without undue cost or effort.
As measured? For its cost in the initial recognition. The cost includes the purchase price, plus any expense directly attributable to it.In the case of properties, whose fair value can be measured reliably without disproportionate effort, they will be measured at fair value on each reporting date, recognizing in results, changes in fair value.
How is it presented? As non-current assets.
How is it revealed?

When investment property is carried at fair value, it will be disclosed:

– The methods and assumptions used in determining the fair value of the investment property.

– The extent to which the fair value of investment property is based on an appraisal made by an independent appraiser.

– The contractual obligations for the acquisition, construction or development of investment properties, or for their repairs, maintenance or improvements.

– A reconciliation that shows separately: – Additions.

– Net gains or losses from fair value adjustments.

– Transfers to Property, plant and equipment.

It is time to start preparing your Accounting and Tax Closing. At realzun realty we teach you how to do it step by step and well done.

Deferred tax when there is compensation for tax losses
Compensation of tax losses and excess presumptive income (deferred tax case)
Deferred tax accounting for portfolio impairment
Long-Term Real Estate Sales: Tax Deferred Case Study
Deferred tax on investment properties in an operating leasing contract
Accounting and tax treatment of establishment expenses:

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