Investment property

Investment property is property a business holds as an investment, to collect rent or gain from a rise in its value, instead of occupying it for its own operations. It is measured at cost or at fair value with gains through profit.

ByHoang TruongUpdated July 11, 2026

FrameworkIAS 40

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A company holds a building let to tenants and measures it under the fair value model. At the start of the year its fair value is €1,200,000; an independent valuation at year end puts it at €1,350,000, a gain of €1,350,000 − €1,200,000 = €150,000. The whole gain is recognised in profit or loss, and no depreciation is charged at all.

Where it fits

SubjectFinancial AccountingAdvancedTopicAsset Measurement & ValuationAdvanced

The formula

LaTeX

G = FV_{1} - (FV_{0} + C)

Variables

$G$: Fair value gain or loss for the period (€)
$F V_{1}$: Closing fair value (€)
$F V_{0}$: Opening fair value (€)
$C$: Capital expenditure added to the property during the period (€)

Gives the amount taken to profit or loss for the period when investment property is measured under the fair value model.