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CGT assistance

Discussion in 'Accounting, Tax & Legal' started by stentorian, 31st Mar, 2008.

  1. stentorian

    stentorian New Member

    Joined:
    31st Mar, 2008
    Posts:
    4
    Location:
    Melbourne, VIC
    Hi,

    I recently sold a property and am having some minor difficulties calculating the CGT.

    I inherited a property worth $350K (land valued at $250K, building at $100K) back in 1984. I spent $200K on an extension to the bulding in 1986.

    I sold it in December last year for $800K (land $500K, building $300K).

    I'm aware of the pre 20 Sep 1985 rule, however how would the extension whih was done after this date affect my position? Do I have to apportion the extension against the initial value or sale?
     
  2. MattR

    MattR Well-Known Member

    Joined:
    23rd May, 2007
    Posts:
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    Location:
    Sydney
    The initial asset, the inherited property, is one asset and it should not be subject to CGT.

    The renovation can be treated as a seperate asset for CGT if it exceeds an improvement threshold that the ATO sets p.a.

    Refer, "Other Capital Improvements to pre-CGT assets"

    Guide to capital gains tax 2006-07

    There may be some scope for concessions if you have used the property as your PPOR during the last 23 odd years
     
  3. stentorian

    stentorian New Member

    Joined:
    31st Mar, 2008
    Posts:
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    Location:
    Melbourne, VIC
    re

    Thanks Matt.

    The ATO documentation suggests that i must be able to reasonably assume the amount of the proceeds that are attributable to the extension. No guidance is offered re: calculating this. Is this something that I should subject to professional judgement?
     
  4. MattR

    MattR Well-Known Member

    Joined:
    23rd May, 2007
    Posts:
    229
    Location:
    Sydney

    Not necessarily. You just need to be able to have a reasonable rationale for the attribution.

    Got any ideas, maybe we can have a looksee
     
  5. stentorian

    stentorian New Member

    Joined:
    31st Mar, 2008
    Posts:
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    Location:
    Melbourne, VIC
    re

    Im not entirely sure, am I right to suggest I might be able to use the cost ($200k) of the extension less any depreciation incurred up to the date of sale as the contributing portion or i might be able to pro rata the extension against the original building?