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Ind-AS 40: Investment Property

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Concept 1 : Meaning of Investment Property

As per the provisions of Ind AS 40, An Investment property means Land, Building or
both which is held for Rental purpose or for Long term Appreciation.
(* Rental Income can be earned from Residential Property, commercial Property or
Industrial property. It means that Nature of property does not matter.)

The following Land & Buildings can not be considered as on Investment property
Under the scope of Ind AS 40 :-

i. If any Land & Building is used by an entity in production or supply of Goods/
Services during Normal course of business then such property will be
Considered under the heading of “ Ind AS 16 : PPE”. Such type of property is a
Also called as “Owner occupied Property”

ii. If any property is held for short Term Appreciation then It will be covered
Under Ind AS-2 as Inventory

iii. If any property is developed by Real Estate company for its sale in future
During normal course of Business then it will also be covered under Ind As-2

Note : If any property is Developed by Building or Real Estate company with the
Objective of Rental Income/ Letting it out then Such property will be covered
Under Ind AS 40.

iv. If any property, which was used by an Entity in its business, but is held for
Sale now then It will be covered under Ind AS 105 : Non current Assets Held for

v. If any Property is held under Construction Contract by a Contractor then It
Will be discussed under Ind AS 115 (Revenue from customer)

vi. If any Land or Building is used in Agricultural Activities then It will be covered
Under Ind AS 41

vii. If any Land is used for extraction of mineral oils or ores then It will be
Covered under Ind AS 106

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