IBA: Qualifying expenditure: Used building bought from developer
A developer may construct a building, have problems selling it and let it out while he is looking for a buyer. When a buyer is found, the building is not an unused building and so the legislation about buying an unused building does not apply. The normal rules about buying a used building do not apply either because the developer’s construction expenditure was revenue rather than capital expenditure.
This is how you calculate the IBA for a person who buys a used building from a property developer. You assume that the developer’s construction expenditure was capital expenditure, that all WDA available had been made to the developer and that the appropriate balancing adjustment had been made on the sale. This lets you calculate the residue of qualifying expenditure after sale and make IBA to the purchaser.