Capital Allowances Act 2001 section 517

Dwelling-house not a qualifying dwelling-house throughout

Section 517 deals with how balancing adjustments are calculated when a dwelling-house was only a qualifying dwelling-house for part of the time the owner held the relevant interest.

• Where proceeds from a balancing event equal or exceed the owner's starting expenditure, all allowances previously given are clawed back through a balancing charge
• Where proceeds are less than starting expenditure (i.e. a loss has been made), the loss is pro-rated to reflect only the period during which the dwelling-house actually qualified, producing an "adjusted net cost"
• A balancing allowance arises if the adjusted net cost exceeds the total allowances already given; a balancing charge arises if allowances already given exceed the adjusted net cost
• Relevant allowances include any initial allowance under Schedule 12 to the Finance Act 1982 and any writing-down allowances for chargeable periods ending on or before the date of the balancing event