Hi guys,
I have a question about how to define what CGT I need to pay based on my specific scenario.2012: Mum “gifted” me 50% of her PPOR, I paid stamp duty only based on property value at the time and became 50% owner of house and land
2014: Knocked down house and put up two townhouses. Subdivided, one in her name, one in mine. Mum lives in one as her PPOR, and my townhouse is an IP rented out.The whole development (both townhouses) including initial stamp duty, development & construction cost me $675,000.
How would I calculate the capital gain if say I sold this year for $1,000,000?
Would my capital improvement be $675,000 divided by 2?So therefore the capital gain is $1,000,000 – ($675,000/2) = $662,000 (Capital Gain)
Any insight would be greatly appreciated!
Ks1985
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This topic was modified 7 years, 3 months ago by
ksun1985.
You mean your costbase?
No, those calcs are not correct. What about the value of the property when you received the gift?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Terryw,
So the value of the site/property was $480,000. I paid stamp duty based on 50% of that value.
So would $240,000 be my costbase? Even though there was no monetary transfer to my mum.
Thanks
That would form part of your costbase.
To work out the cost base we need to know the costs for the 5 elements described under Section 110-25 of the ITAA 1997 which are:
1. Money paid or required to be paid for the asset.
2. Incidental costs of acquiring the asset, or costs in relation to the CGT event, for example, stamp duty, legal fees, tax advice, and so on.
3. Non capital costs you incur in connection with your ownership, for example, interest, rates, land tax, repairs and insurance premiums (provided not previously claimed). Included are any expenses incurred while the property was an owner occupied property.
4. Capital expenditure you incur to increase the value of the asset, if the expenditure is reflected in the state or nature of the asset at the time of the CGT event.
5. Capital expenditure you incur to preserve or defend your title rights to the asset.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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This topic was modified 7 years, 3 months ago by
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