All Topics / Legal & Accounting / Owner/builder calculating cost base for CGT

Viewing 8 posts - 1 through 8 (of 8 total)
  • Profile photo of minds-eyeminds-eye
    Participant
    @minds-eye
    Join Date: 2013
    Post Count: 45
    February 26, 2013 - 4:18 am

    After building a property how does the ATO calculate true cost base for CGT purposes?

    Say if I spend $500K for land + to build a house, which then has a market value of $600K once completed and begins leasing.

    Which figure is used to calculate the cost base?

    Is a special valuation done when the house being leasing?

    Thanks!

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    February 26, 2013 - 6:30 am

    You need to calculate the cost base. Cost of land and materials, stamp duty etc, Market value wouldn't come into it.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of minds-eyeminds-eye
    Participant
    @minds-eye
    Join Date: 2013
    Post Count: 45
    February 26, 2013 - 6:47 am

    Thanks Terry. That makes sense.

    This would differ if i lived in the property first as my main residence?

    In that case, would a special valuation take place when i began leasing the property?

    i.e. "home first used to produce income" rules by the ATO

    http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/36910.htm&page=3&H3

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    February 26, 2013 - 8:39 am

    If it was first used as a main residence then two options
    1. Keep it as your main residence while renting out, temp absence rules. s118_145 ITAA 1997
    or
    2. s118-192 ITAA 1997 first use to produce income.
    ” (2) You are taken to have * acquired the * dwelling or your * ownership interest at the income time for its * market value at that time.

    “
    http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.192.html

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of PLCPLC
    Participant
    @plc
    Join Date: 2012
    Post Count: 400
    February 27, 2013 - 7:22 am

    Also when its time to sell, sales agent commissions, legals, etc associated with selling can be added to the cost base.

    Cheers

    Tom

    PLC | Phoenix Loan Consulting
    Email Me | Phone Me

    Melbourne based Mortgage Broker | Making Finance Simple

    Profile photo of minds-eyeminds-eye
    Participant
    @minds-eye
    Join Date: 2013
    Post Count: 45
    February 27, 2013 - 8:40 am

    Thanks guys, this is all very good info to fill in the gaps of my knowledge. Much appreciated!

    Profile photo of not_so_luckynot_so_lucky
    Member
    @not_so_lucky
    Join Date: 2008
    Post Count: 121
    March 24, 2013 - 3:59 am

    Are you planning on doing a lot of the work yourself? Or paying cash (god forbid) to some tradies? 

    Profile photo of minds-eyeminds-eye
    Participant
    @minds-eye
    Join Date: 2013
    Post Count: 45
    March 25, 2013 - 4:11 am

    Hi not_so_lucky,

    I will be using a builder who will sub-contract the tradies.

Viewing 8 posts - 1 through 8 (of 8 total)

You must be logged in to reply to this topic. If you don't have an account, you can register here.