Hi All, This is a pretty simple question. I could ask my accountant tomorrow but I really want to know now what the answer is. Is a renovation considered in capital gains when you sell a property? Lets say I buy a place for 1Mil (inc stamp duty etc) and spend 200K on a renovation, if I sell for 1.3Mil is the profit 100K and what I pay tax on? or is it simply the difference between the buying price and the sale price?
Thanks in advance.
it is generally as you first said. the renovations increase the cost base of the property. effectively just making it as if you paid more for it.
BUT there are catches… if you are deemed to be in the business of renovating properties then it counts as income and stock etc. here is a page from the ato which gives some examples so you can tell what situation you are in.
If you still cant tell after reading that, best to talk to your accountant.
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