Capital gains tax

Discussion in 'The Buying & Selling Process' started by Westnblue, 3rd Jul, 2018.

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  1. Westnblue

    Westnblue Well-Known Member

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    I'm trying to work out a capital gains tax amount for a friend that sold a property.

    She paid $38k for house. Spent $80k reno it. Sold $172k .

    so i assumed the capital gains would be

    Sold price - (purchase + reno cost) = taxable amount

    She phoned a couple accountants and they said the reno cost can't be claimed as an expense.
    Any thoughts on this?
     
    Westnblue, 3rd Jul, 2018
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    What about the 4th element of the cost base calcuations?
     
    Terry_w, 3rd Jul, 2018
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  3. Simon Hampel

    Simon Hampel Founder Staff Member

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    C'mon @Terry_w - that's not very helpful :p

    I would have thought the reno cost would be considered a capital expense and added to the cost base (minus any deductions claimed for capital works). Perhaps your friend asked the wrong question?

    Renovating properties

    If you're considered a personal property investor, your net gain or loss from the renovation (proceeds from the sale of the property less the purchase and other costs associated with buying, renovating and selling it) is treated as a capital gain or capital loss respectively.​

    More examples:
    Calculating the cost base for real estate
     
    Simon Hampel, 3rd Jul, 2018
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  4. Westnblue

    Westnblue Well-Known Member

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    Labor? Its included in reno cost
     
    Westnblue, 3rd Jul, 2018
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  5. Westnblue

    Westnblue Well-Known Member

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    Thanks. I will let her know.
     
    Westnblue, 3rd Jul, 2018
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  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Terry_w, 3rd Jul, 2018
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    wylie and Phantom like this.
  7. Westnblue

    Westnblue Well-Known Member

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    Westnblue, 3rd Jul, 2018
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