A property may be reclassified from property, plant, and equipment (PPE) to investment property or vice versa under the following circumstances in accordance with IAS 40:

1. Commencement of Owner-Occupied Use: If an investment property is now being used by the owner, it must be transferred to PPE.
2. End of Owner-Occupied Use: When an owner-occupied property begins to be rented out or held for capital appreciation, it is reclassified as an investment property.
3. Development Intent for Sale: Properties initially classified as investment properties are transferred to inventory if they are developed with the intent to sell.

For accounting treatment:

• If the fair value model is applied, the property should be revalued, with any gain or loss recognized, and then reclassified.
• Under the cost model, the carrying amount is maintained upon reclassification and depreciation continues based on the asset’s remaining useful life.