A builder buys a derelict property for €100,000. He spends €60,000 directly on refurbishment
and €4,000 on marketing and selling the refurbished property. A delay in obtaining planning
permission results in him being unable to get all of the work done within the qualifying
period. Work to the value of €10,000 is carried out outside of the qualifying period. He sells
the refurbished property for €250,000 (VAT inclusive) to Mr. Nolan.
The qualifying expenditure according to the formula is as follows:
€250,000 X €50,000
€60,000 + €100,000 = €78,125
Mr. Nolan’s qualifying section 23 expenditure is €78,125
Example 2
Mr. Nolan was unexpectedly forced to sell the house in the previous example before it could
be used. He sold it to Mr. Hurley for €230,000. Mr. Hurley’s qualifying expenditure
according to the formula is as follows:
€230,000 X €50,000
€60,000 + €100,000 = €71,875
Mr. Hurley’s relief is €71,875 as it is lower than €78,125, which was the relief that would
have been due to Mr. Nolan. If Mr. Hurley had purchased the house for €260,000, the
qualifying expenditure according to the formula would have been €81,250. In this case, Mr.
Hurley’s relief would be limited to €78,125, i.e. the amount of Mr. Nolan’s relief.