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?
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
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?
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
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?