Capital Allowances Act 2001 section 503

Purchase of dwelling-house sold unused by developer

Section 503 sets out how qualifying expenditure is determined when a developer sells a newly constructed qualifying dwelling-house before it has been used, and the purchaser (or a subsequent buyer) acquires the relevant interest.

• Where a developer builds a qualifying dwelling-house and sells the relevant interest before the property is first used, the purchaser may have qualifying expenditure for capital allowances purposes.
• If the developer's sale was the only sale before first use, the capital sum paid by the purchaser is the qualifying expenditure; if there were further sales before first use, the qualifying expenditure is the lower of the last purchaser's capital sum and the price paid on the developer's original sale.
• The qualifying expenditure is treated as incurred at the point the relevant capital sum became payable.
• A "developer" is defined as a person whose trade consists wholly or partly of constructing buildings for sale, and the sale must take place in the course of that development trade.