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chrisfan(Initiate)Initiate
27 Sept 2023

Hello Jodie,


I have few questions for the response you have put under this discussion, "Adjusting cost base for Div 40 Deduction." Apologies to start another topic, as I couldn't reply to that discussion page.


I can understand if there was dv 40 claimed as deduction before, this will have to reduce cost base and if there is any remaining value at the sale of the asset, it reduces the proceeds.


Relating to DV 43,


  1. Would previously claimed dv 43 as deduction reduce the cost base?
  2. If there was any remaining value under dv 43 at the time of sale would this reduce the sales proceed? In the case study you provided, there wasn’t any reduction in dv 43 from the proceeds but only dv 40.


https://community.ato.gov.au/s/question/a0J9s0000001K24EAE/p00053306?referrer=a0N9s000000Dac7EAC


Thankyou

Chris

@Jodieato

6,862 views
3 replies
6,862 views
3 replies

Most helpful response

Most helpful reply

AriATO(Community Support)Community Support
5 Oct 2023

Hi @chrisfan


Thanks for waiting while we checked this out.


Yes, on sale of a rental property, both Div 40 and Div 43 deduction amounts over the years of ownership of the rental property reduce the CGT cost base on sale of a rental property.


On our website for CGT when selling your rental property, see the example about Karl and Louisa which provides in part.


It should be noted that formally both the proceeds and cost base should have been adjusted by reference to payments for separate depreciating assets and rental property at purchase and sale. This was previously explained by JodieATO in the other post. However, because we (the ATO) generally accept that the depreciating assets on sale can be accepted as being sold at the written down values under the decline in value rules. Then the same outcome is reached using that approach, as with the method described in the example.

 

All replies

Most helpful reply

AriATO(Community Support)Community Support
5 Oct 2023

Hi @chrisfan


Thanks for waiting while we checked this out.


Yes, on sale of a rental property, both Div 40 and Div 43 deduction amounts over the years of ownership of the rental property reduce the CGT cost base on sale of a rental property.


On our website for CGT when selling your rental property, see the example about Karl and Louisa which provides in part.


It should be noted that formally both the proceeds and cost base should have been adjusted by reference to payments for separate depreciating assets and rental property at purchase and sale. This was previously explained by JodieATO in the other post. However, because we (the ATO) generally accept that the depreciating assets on sale can be accepted as being sold at the written down values under the decline in value rules. Then the same outcome is reached using that approach, as with the method described in the example.

 

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Cost base for Div 40 and Div 43. | ATO Community