Hi there, For the accountant's out there, to help legitimately reduce CGT payable on property gains, is it possible to have the property revalued to reflect current market values? Example: Land is purchased 10 years ago which at today's prices, is worth more than the purchase price. Can a current valuation be used for the cost base not the original purchase price? Thanks Al
No. CGT is calculated using a defined set of rules that refers to CGT events of different types. Each event has specific rules for the cost base. There are also cost base rules for determining what the cost base is. One issue with land is that it may become trading stock. When land becomes trading stock a CGT event occurs. The taxpayer has a choice of methods to value it. Cost or market...(If you use cost then the CGT = zero. If MV is used a CGT with discount may occur) So you can trigger a discount capital gain maybe. Then when its subdiv and sold ordinary income tax is less. However all that leads on to issues such as GST and margin scheme etc. Personal tax advice on your intentions would be a critical step.
I'm confused. Why would a current value be used for the cost base instead of the price you bought it at?
@Paul@PFI, Thanks for the information - it was as I thought. My accountant and lawyer are currently looking into this for me. The land may potentially be classed as trading stock (in line with other transactions of mine) so this could be a slightly different outcome.
