From time to time a valuable gem gets shared with issues involving CGT calcs on property. The issue of third element costs crops up. These are costs which were incurred by the owners during ownership for which a tax deduction has never been claimed. See link for specific example in law. Good example of this came up today with a person who bought their PPOR but couldnt move in for 3 months. So we can all see there is a period where pro-rata CGT will apply. The question was - Can I use these third element costs to reduce the CGT later if I sell. Good question. Basic answer is yes. This requires a basic example and explanation. The illustration then highlights the diminishing and often trivial nature of this issue. So lets assume the above example and lets assume a total CGT profit of after 10 years. Taxable days - 90 Exempt days - 3562 Total days - 3652 So taxable gain is $3,696. But we can add in ownership costs in the 3562 days for which no deduction was claimed and these come off the $300K FIRST. So lets assume a loan, rates and typical ownership costs like insurance. Lets say $120K. So the capital gain is now $300,000- $120K = $180K. So taxable gain is now $2,217 And the longer the period of ownership the greater those costs are but also the higher the total gain AND then the lesser period that is taxable as a percentage of the total gain eg 90days remains constant and diminishes as a percentage with time. eg 2.46% in the 10 year example. A race that never ends. So you chase a depleting benefit. Improvements, renovations etc during the period as PPOR may further count.