A client has five properties that qualify for the Section 13sex allowance. One of the properties is a townhouse. The houses are free standing, but the garages are joint by a wall. Would this property qualify for the 55% or 100% allowance?
Important:
This answer is based on tax law for the tax year ending 28 February 2018.
Answer:
You are reminded that our technical query system policy prescribes that only guidance should be provided in relation to requests submitted. To do otherwise would cause us to compete with its own members. Guidance implies that sources or references relevant to the request are provided, but that ultimately the tax practitioner’s own professional judgment is required to be applied to the specific circumstances. We will therefore not answer your question.
We are not why you consider the garages to be a residential unit.
Section 13sex(8) reads as follows:
For the purposes of this section, to the extent that the taxpayer acquires a residential unit (or improvement to a residential unit) representing only a part of a building without erecting or constructing that unit or improvement-
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55 per cent of the acquisition price, in the case of the unit being acquired; and
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30 per cent of the acquisition price, in the case of the improvement being acquired, is deemed to be the cost incurred by that taxpayer in respect of that unit or improvement, as the case may be.
You must read paragraph 4.6 in the practice generally prevailing. The following is an extract from the paragraph:
“The reference to a residential unit representing only a part of a building would apply, for example, to the acquisition of a flat forming part of a block of flats under sectional title.”