CA37375 - IBA: Enterprise zones: Purchase of used buildings within two years of first use

CAA01/S301

Used buildings:

• do not qualify for initial allowance, and
• qualify for WDA based on the residue of qualifying expenditure after sale spread over the rest of the 25 year writing down period.

unless they are bought within 2 years of first use. A person who is the first one to buy a used building in an enterprise zone within 2 years of first use is treated as buying an unused building. This means that the allowances are based on a new amount of qualifying expenditure and that an initial allowance of 100% or WDA at the 25% rate is available.

Where a person buys a used building in an enterprise zone within 2 years of first use calculate a balancing adjustment for the seller in the usual way.

A taxpayer who buys any other type of used building in an enterprise zone cannot claim the 25% rate of WDA. WDA is based on the residue of qualifying expenditure after sale in the normal way CA34600.