Cost base for selling land that was previously OO home.

Hi All

hypothetical simplified situation.
I have some land that I am selling.
Previously purchased as land, built a house on, PPOR for <6 years and investment rental for about 20 years.
the house was recently demolished, what forms the cost base of that land?

Thanks in advanced.

Travis

 

purchase price. Can't be a main residence without the residence!

 

Actually it may be the value at the time it first produced income if you had lived in it.

 

thanks, that was what I was thinking, get a valuation of when it is changed purpose to investment and use that as your base cost.

 

There is more to explore in this tax issue. Why was the house demolished and when ? Were other costs incurred in the exercise ? The sale of the land likely will NOT be covered by the main residence exemption as its a vacant block of land. However, for some part of the time it may have been and then later subject to a CGT event that triggers a different CGT issue to protect and preserve the past CGT exemption. Otherwise without that its not subject to the main residence exemption.

More complex issues require advice so that the potential CGT or income tax applicable can be reduced. The issue of GST also needs to be considered since vacant land can be subject to GST. Dont fear GST as it could even result in Nil payable or a refund but will be a safety net so penalties dont later apply.

The date and type of valuation needed may be either a formal one or a informal opinion based on the tax advice.

 

s118-192 also applies, pro-rata perhaps for the absence rule. However market value may also need to be determined closer to the time of sale I suspect as a additional CGT event may have occurred

 

thanks Paul for the detailed info.