Capital Allowances Act 1990

88 Dwelling-houses not continuously qualifying dwelling-houses

(1) If, in a case where section 87(1) applies, a dwelling-house which had been a qualifying dwelling-house was not, for any part of the relevant period, such a dwelling-house, the provisions of this section shall have effect instead of subsections (3) and (4) of that section.

(2) Subject to subsection (4) below, where the sale, insurance, salvage or compensation moneys are not less than the capital expenditure appropriate to the dwelling-house, a balancing charge shall be made and the amount on which it is made shall be an amount equal to the allowances given.

(3) Subject to subsection (4) below, where there are no sale, insurance, salvage or compensation moneys or where those moneys are less than the capital expenditure appropriate to the dwelling-house, then—

(a) if the adjusted net cost of the dwelling-house exceeds the allowances given, a balancing allowance shall be made and the amount thereof shall be an amount equal to the excess;

(b) if the adjusted net cost of the dwelling-house is less than the allowances given, a balancing charge shall be made and the amount on which it is made shall be an amount equal to the shortfall.

(4) No balancing charge or allowance shall be made under this section on the occasion of a sale if, by virtue of section 158, the dwelling-house is treated as having been sold for a sum equal to the residue of expenditure before the sale.

(5) In this section—

• “the relevant period” means the period beginning at the time when the dwelling-house was first used for any purpose and ending with the event giving rise to the balancing allowance or charge, except that where there has been a sale of the dwelling-house after that time and before that event, the relevant period shall begin on the day following that sale or, if there has been more than one such sale, the last such sale;

• “the capital expenditure” means—

  (a)

  where paragraph (b) of this definition does not apply, the capital expenditure incurred (or by virtue of section 91 deemed to have been incurred) on the construction of the dwelling-house;

  (b)

  where the person to or on whom the balancing allowance or charge falls to be made is not the person who incurred (or is deemed to have incurred) that expenditure, the residue of that expenditure at the beginning of the relevant period,

  together (in either case) with any amount to be added to the residue of that expenditure by virtue of section 90(9);

• “the allowances given” means the allowances referred to in section 87(6);

• “the adjusted net cost” means—

  (a)

  where there are no sale, insurance, salvage or compensation moneys, the expenditure appropriate to the dwelling-house; and

  (b)

  where those moneys are less than that expenditure, the amount by which they are less,

  reduced (in either case) in the proportion that the part, or the aggregate of the parts, of the relevant period for which the dwelling-house is a qualifying dwelling-house bears to the whole of that period.