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Capitalised interest

Discussion in 'Accounting, Tax & Legal' started by matchbox, 28th Apr, 2011.

  1. matchbox

    matchbox New Member

    Joined:
    28th Apr, 2011
    Posts:
    2
    Location:
    Perth, WA
    Hi all,
    My wife & I built a house as an investment in 2007. We lived in it for about the first 12 months, essentially to fit it out & complete the building process before moving back to our original & present house.
    The house was rented for the subsequent 2 1/2 years since moving out.
    I was never intending to call the investment property our principle residence.
    We sold the investment property in February 2011 & my query is, can we capitalise the interest for CGT purposes (i.e. increase the cost base) for the period we lived in it?

    Thanks
     
  2. DrJohns

    DrJohns Member

    Joined:
    18th Jan, 2010
    Posts:
    22
    Location:
    Adelaide, SA
    Yes. Ownership costs, which include interest, rates, maintanence, insurance etc. while you were living in it (and therefore not claiming a tax deduction) form part of the cost base to reduce your gain.
     
  3. matchbox

    matchbox New Member

    Joined:
    28th Apr, 2011
    Posts:
    2
    Location:
    Perth, WA
    Thanks DrJohns.
     
  4. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    It may even be possible to avoid CGT totally by applying the absence from main residence rules, (s 1118-145 ITAA 1997) while you were renting it out.