Taxes Consolidation Act 1997 section 279

Purchases of certain buildings or structures

Section 279 sets out the rules for determining the amount of capital expenditure qualifying for industrial building allowances where a newly constructed or refurbished building or structure is purchased before it is used or within two years of first being used.

• Where a newly constructed industrial building is sold before use or within two years of first being used, the purchaser is deemed to have incurred the construction expenditure, provided no allowances have been claimed by any other person.
• The "net price paid" formula allocates the purchase price between allowable construction costs and non-allowable costs (such as site costs), so that capital allowances are only available on the construction element.
• For a purchase from a non-builder, the deemed construction expenditure is the lower of the actual construction cost and the net price paid; for a purchase from a builder, it equals the net price paid, thereby including the builder's profit margin.
• The deemed construction expenditure is treated as incurred on the date the purchase price becomes payable, not when the actual construction expenditure was incurred.