The developer

How do we define developer?

A person who erects, extends, adds to or improves a building or part of a building –
 
a. With  the purpose of disposing of that building or part thereof immediately after completion of that erection, extension, addition or improvement; and
 
b. Disposes of the building or part of a building within three years after completion of that erection, extension, addition or improvement.
 
According to the definition of “developer”, a developer may temporarily use or rent out property that was constructed or improved by it for a period of three years. This rule is applicable from 10 January 2012 and relates to contracts of sale concluded on or after this date. The old definition of “developer” will apply to a contract of sale that is concluded before 10 January 2012 and no deduction will be allowed to the purchaser of the property that was previously used or leased by the developer.
 
We have created an example of a UDZ claim made by a developer to explain things further.
 
So what happens with purchases that are made from developers and what costs are considered then?
 
A taxpayer may claim a UDZ incentive on the “purchase price” paid to a developer for the acquisition of a UDZ an entire building or part of it.  The “purchase price” relates to any building or part of the building that is purchased by a taxpayer from a developer means the lesser of –
 
a. The actual cost to the taxpayer to purchase that building or part; or
 
b. The cost which a person would have incurred had that person purchased that building or part under a cash transaction concluded at arm’s length on the date on which that taxpayer purchased that building or part.
Last Updated: 11/12/2018 8:54 AM     print this page
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