How Do Accountants Handle Housing Renovation Fees?

In practice, housing renovation is a frequent occurrence. How to pay the cost of housing renovation?

stay Taxation On the disposal, whether the deduction of assets depreciation or the separate amortization, or the one-time deduction as a deduction, depends on the "ownership". In terms of corporate income tax, different situations need to be dealt with separately.

1. The expenses for the renovation or reconstruction of the houses that have been fully extracted or rented in the form of operating lease or the eligible buildings shall be amortized according to the regulations as a long-term prepaid expenses.

According to the provisions of the enterprise income tax law, when calculating the taxable income amount, the following expenditures of the enterprise shall be regarded as the long term pending expenses: (1) the expenditures for the reconstruction of the fixed assets that have been fully extracted; (two) the alteration expenses for renting fixed assets; (three) the heavy repair expenses for fixed assets; (four) other expenses that should be paid for the long term prepaid expenses.

The fixed assets here only refer to houses or buildings, excluding other fixed assets, and do not include houses and buildings without adequate depreciation.

For full extraction depreciation For housing or buildings, book value only has net residual value. That is to say, the available value of the asset has all been transferred. At that time, the cost of rebuilding the assets can not be included in the cost of fixed assets. Because the value form of fixed assets has disappeared and the subsequent expenditure has lost the carrier that can be attached. Therefore, it should be used as a long-term prepaid expenses and be amortized in the estimated useful life of fixed assets.

The risks and rewards associated with the assets are not transferred to the lessee, so the ownership of the assets still belongs to the lessor, and the lessee only has the right to use the asset within the time limit stipulated in the agreement. Therefore, the cost of rebuilding the fixed assets leased by the leasing method can not be included in the cost of the fixed assets, and can only be counted. Long term prepaid expenses Amortize according to the remaining lease term stipulated in the contract. For heavy repair expenses, it is necessary to meet the above 50% conditions: "the repair cost reaches more than 50% of the tax base when obtaining fixed assets, and the two years after the fixed assets are fixed for more than 2 years after repair". The expenditures for such repairs will be amortized according to the useful life of fixed assets. If the above two conditions are not conformed at the same time, it should be cost oriented and one-time cost deduction.

As a long-term overlay amortization, the major repair expense includes both the expenditure of realty alteration of the self owned house or building, and other fixed assets such as the subsequent repair expenses of the machinery and equipment. Other expenses that should be used as a long-term prepaid expenses shall be amortized for a period of 3 months from the first month of the month of expenditure.

As a long-term prepaid cost accounting, when occurring:

Borrowing: long term deferred expenses

Loan: bank deposit

Amortization time:

Borrowing: management costs

Loan: long deferred expenses {page_break}

　 Two. The expenses for the reconstruction of new buildings or buildings should be included in houses or buildings. fixed assets The original value is calculated by means of depreciation. If the alteration cost is prolonged, the depreciation years should be appropriately extended.

The fifty-eighth section and sixth paragraph of the regulations on the implementation of the enterprise income tax law stipulate that the fixed assets that are converted shall be increased in addition to the expenditures stipulated in item thirteenth (1) and (two) of the enterprise income tax law. Here is a clear definition of the expenditure of newly built houses or buildings, that is to say, depreciation is the way to rebuild the expenditure. Instead of long-term amortization. The tax base here refers to the original value of "fixed assets - housing construction". If the extension of expenditure is extended, the depreciation years should be appropriately extended. For example, a businessman spent about 10000000 yuan to buy an office building in 2012. After spending about 200000 yuan on the office building for a large-scale renovation, the about 200000 yuan renovation fee should belong to the new housing or building renovation expenses, and it was included in the original value of "fixed assets - housing construction", and the cost was calculated by way of depreciation. The cost of rebuilding a house or building that is leased into a financial lease is handled according to the alteration expenses of new buildings or buildings.

The expenses for alteration of new buildings or buildings at the time of occurrence:

Borrowing: fixed assets -- housing buildings

Loan: bank deposit

When depreciation is calculated

Borrowing: management costs

Loan: accumulated depreciation

In terms of property tax, the Ministry of Finance and the State Administration of Taxation on the interpretation and provisional provisions on some specific issues of property tax (fiscal and taxation 1986 [8]) stipulate that the real estate tax is based on the "original value of real estate", which refers to the original housing price recorded in the book "fixed assets" in accordance with the accounting system. If the cost of rebuilding a new house is changed, the original value of the corresponding housing will be increased because of the alteration expenses. Therefore, when the property tax is collected, the original value of the newly added house will be used as the tax basis for the property tax.