Taxation of Chargeable Gains Act 1992 Schedule 4ZZB paragraph 10

Interest subsisting under contract for off-plan purchase

Paragraph 10 of Schedule 4ZZB deals with how to determine the period of ownership for capital gains purposes when a person holds an interest in a residential property under an off-plan purchase contract — that is, a contract to buy a property that has not yet been built or completed.

• When someone enters into a contract to purchase a residential property off-plan (before it is built or completed), they are treated as holding an interest in the property from the date the contract is entered into, not from the date of legal completion.
• This earlier start date for the period of ownership can affect the calculation of any chargeable gain or allowable loss when the property is eventually disposed of, particularly in relation to private residence relief and other time-based reliefs.
• The rule applies where a person acquires an interest in a dwelling by virtue of, or in connection with, a contract entered into before the dwelling is constructed or completed, recognising that a genuine economic interest exists from the contract date.
• This provision was introduced by the Finance Act 2019 and ensures that the treatment of off-plan purchases is consistent and clear for the purposes of computing gains on residential property.