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CMT(Enthusiast)Enthusiast
16 July 2021

Hi Team,

Just wondering if a property was purchased for owner occupied used for $500k, other assoicated cost (stamp duty, legal fees etc.) $25,000 in 2015. The property was used as main residence till 2019 and re-value at $800k when it then used as investment property and generate rental income. It was then sold for $750k in 2020 with selling agent fee $15k.

In this case, would it be consider capital loss of $58k ($750k - $800k) and 1/5 of the buying and selling cost to be pro-rata to $8k.

Or it should be $50k only without pro-rata the associated buying and selling cost.

Many Thanks.

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Most helpful reply

JodieR_ATO(Community Support)Community Support
18 July 2021

Hi @CMT,

If the property was a main residence initially then used as an investment property, market value will be from the day it was first used to produce income. When calculating cost base you can look at what can be included under elements of the cost base. You can also use the partial exemption to work out the no' of days it was not a main residence over the no' of days ownership. Once cost base is determined you will need to deduct this away from the sale price, the difference will be you capital gain or loss.

Please use the links for further assistance, this will allow you to work out the amount to include on the return.

If you have other questions, please let us know.

All the best.

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Most helpful reply

JodieR_ATO(Community Support)Community Support
18 July 2021

Hi @CMT,

If the property was a main residence initially then used as an investment property, market value will be from the day it was first used to produce income. When calculating cost base you can look at what can be included under elements of the cost base. You can also use the partial exemption to work out the no' of days it was not a main residence over the no' of days ownership. Once cost base is determined you will need to deduct this away from the sale price, the difference will be you capital gain or loss.

Please use the links for further assistance, this will allow you to work out the amount to include on the return.

If you have other questions, please let us know.

All the best.

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_MARK13(I'm new)I'm new
14 Sept 2021

Hi Jodie,

Thank you for your answer, Really helpful. I have the same situation but don't have a Valuation on the time of renting out. In this situation how can we obtain the valuation of the property?

Build-in 2013 used as O/O property, refinancing property on 2015 still used as O/O but from 2016 the property was rent out. and Sold in 2020.

I don't do any valuation in 2016 but have a valuation in 2015.

Thank you

JodieR_ATO(Community Support)Community Support
17 Sept 2021

Hi @MARK13,

You can seek advice from a real estate agent familiar with that area when you rented the property. They can provide you with an appraisal on market value by considering similar properties at that time, and how much they sold for. This amount will be factored into your cost base. If you bought a 2nd property then you would be looked at for CGT, however, if you rented elsewhere and didn't purchase a 2nd property, you could use the 6yr absence rule.

If you're declaring capital gains, a partial exemption will also apply. The formula is A × (B ÷ C), where:

  • A is the total capital gain from the CGT event,
  • B is the number of days in your ownership period when the dwelling was not your main residence and
  • C is the total number of days in your ownership period.

Thereafter you will report your total capital gain at the total capital gain label. As you owned the property for 12mnths+, you can then apply the CGT discount, the new figure will be reported at your Net capital gain label. This is also the label we use when applying marginal tax rates.

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