Hello!
Can someoene explain to me which costs can be claimed and which costs are added to the cost base of a property for calculating capital gains?
For example
Settlement fees
Land titles office search fees
DOLA EAS fee
Land Tax department enquiry fee
Coucil Rates “
Water Corp “
Registration fee on transfer document
Stamp Duty
Mortgage InsuranceAlso I have read in a book the following quote “Capitalize your stamp duty and depreciate it” My question is, how can you depriciate Stamp Duty?
Thanks
Seb
Hi there,
Did you manage to find an answer to your question “capitalizing stamp duty”?
I emailed my accountant, who came back with this answer.
You cant claim depreciation on Stamp duty. Stamp duty forms part of the cost base of the property.
Which was outlined by Michael & Kaye.
regards
4walls
Yeah thanks 4walls,
I thought that would be the case because you cannot depreciate something that does not effectively incur any “wear and tear”. I must re read that section in the book as I may have interpreted it incorrectly.
Thanks again
Seb
Sorry Michael, I overlooked & didn’t know you has carried over the topic of Working Out Capital Gain here.
You wrote “we can add any capital cost not claimed against income, such as renovations or the closing value of assets not fully depreciated. Add these to cost base.”. This is the grey area. Can you clarify further what the cost base should be for the following senario:
1. New carpet value $5000 included in the purchase cost (Land 320,000, building 180,000, F&F 50,000). Depreciation claimed for 2 years at 15% of $5000.
2. Pay $5000 for the carpet right after settlement (new house without carpet. Depreciation claimed for 2 years at 15% of $5000.
3. Replace the carpet for $6000 after 1 year. Depreciation claimed for 1st year at 15% of $5000, 2nd year at 15% of $6000 (???). Can we claim the writeoff amount ($5000 * 85%) at this point?
4. Replace the carpet for $6000 just before selling the IP.
I couldn’t find any info regarding the deduction of the closing value of F&F from the cost base. It appears that for the F&F value already included in the purchase price we don’t need to deduct the past depreciation claims from the cost base! I hope this is the case otherwise all F&F depreciation claims would have to pay back at selling time. It would be a huge problem for people like us who rely on depreciation claims to make up for the loss from low retal income.
Regards
Huey
[
]Hi Michael,
IP : New house purchased for $450K (not $550K, sorry). Paid > $400 for property tax allowance schedules. The schedules specify : Land : 220,000, building (Division 43 allowance): $180,000, F&F (Plant) : 50,000.
Plant ($50,000) includes carpet $5000, dishwasher $1200, Stove $500, counter fittings, shelving $4000 ……. so carpet is not paid separately.
Depreciation for carpet is allowed at 15% of $5000 (diminishing rate).
I hope I can explain it a bit better.
Cheers
Huey
Hi Michael,
Your other replies make sense, just as I thought.
Q1 is the one that I’m confused. Here is the extra details :
Mortgage duty : $1,600
What is Transfer duty ? is that stamp duty($16,000)? The bank charged us few hundred dollars extra for mortgage registration or something like that!
(The numbers provided are only for the purpose of calculation. They are not exact.)
Sorry Sebastian. I hope this info will help us all.
Cheers
Huey[
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]The topic ‘Capital Cost Base & Expenses’ is closed to new replies.
