Capital Allowances Act 2001 section 502

Purchase of unused dwelling-house where developer not involved

Section 502 determines the qualifying expenditure when someone purchases a newly built qualifying dwelling-house that has never been used, in circumstances where no developer is involved in the sale.

• Where a building constructed to be or include a qualifying dwelling-house is sold before any dwelling in it is first used, and no developer is involved, the purchaser may claim qualifying expenditure for assured tenancy allowances.
• The qualifying expenditure is the lower of two amounts: the capital sum the purchaser actually paid for the relevant interest, or the original cost of constructing the building.
• The qualifying expenditure is treated as incurred at the point when the capital sum became payable, not when construction costs were originally spent.
• If the relevant interest changed hands more than once before any dwelling in the building was first used, only the final sale before first use is taken into account for calculating qualifying expenditure.