Determining cost base for KDR

Hello

I've done a knock down rebuild as an owner builder on a property that started out as an investment (6 months). After that point I went ahead and demolished and rebuilt. My intention is to live in the premises for 12 months as PPOR before selling.

I understand since it was a IP upon commencement I need to proportion my CGT based on the split of IP/PPOR.

How do I determine the cost base for the IP component of CGT?
Do I seek out a valuation report from a property valuer?
Or get a quantity surveyor report?

Thanks

 

Add up all the cost base expenses such as purchase price, demo, build, holding costs (including after you move in) and then x it by the number of days it was the main residence v not.

Valuation can't be used. QS can't be used if you know the costs which you would since you incurred them

 

Some trades were done by mates for no charge or I DIY because I've done them before e.g. waterproofing, I only paid for materials in those instances. Would that be a good reason to use a QS since if I added up the aforementioned work the labour component isn't quantified?

 

I don’t think you could.

@BMT Tax Depreciation might know

 

What about TR97/25 s28?

TR 97/25 | Legal database

Also this authorisation number:
1051886261873

 

Neither of those support your position I'm afraid.

There are 2 questions you want to get answers to

a) can you depreciate a claim an amount for labour costs when it wasn't paid, and
b) if you know the costs incurred for building can you use a QS report with different costs.

Neither of those address either question and its something I have never considered

 

No not at all. Your costbase is based on actual cost and you must be able to substantiate this. The QS exception to asesses building costs is only for depreciation purposes and this is irrelevant for a owner occupied property that is newly constructed and for a costbase. In cases like this you may have a low costbase relative to market value and if you paid cash / nothing its even worse.

 

Sorry, I've been on leave, but I think Paul covered it above.

What I will say is that we ask for costs, and we use what we're given in good faith, particularly if it lines up with what we see at an inspection. If someone gives us a cost that seems wildly inflated (or ... deflated?), then we'd question it. Regardless, the responsibility remains with the taxpayer if we've ticked the appropriate boxes.

We do get people wanting to claim imagined costs all the time, and I gently remind them that the ATO doesn't love people claiming deductions for money they haven't spent.

 

@Terry_w regarding "number of days it was the main residence" does this time include the time it was being built e.g. 7 months?

 

It could in some cases

 

Or even earlier in some cases back to the date when the land was acquired or up to 4 years. There are conditions to this rule
1. No other property owned by any of the owners can also be a main residence for any overlapping days
2. You must occupy as soon as practicable aftre completion for at least 3 months