Capital Allowances Act 2001 section 522

Adjusted net cost

Section 522 sets out how to calculate the adjusted net cost of a dwelling-house for the purposes of flat conversion allowances.

• The adjusted net cost is found by taking the starting expenditure on the dwelling-house and deducting any proceeds from a balancing event.
• This net figure is then proportionally reduced to reflect only the days the property qualified as a qualifying dwelling-house.
• The proportion is the number of qualifying days divided by the total number of days in the relevant period of ownership.
• The resulting formula is (S − P) × I / R, where S is starting expenditure, P is balancing event proceeds, I is qualifying days, and R is total days of ownership.