Hi All!,
I have an investment property that was rented for 30 years but was destroyed by fire in August 2023. The property is a write off and the insurer has paid approx $300k for the loss of the property. They estimated rebuild costs slightly higher than this so chose to make a payout instead of rebuilding, with which I am fine. My intention is to demolish the house and clear the land (in the next 6 months), and then sell the vacant land. It is likely I will sell the land in FY24/25.
My Questions are:
1. As the insurance payout is significantly more than the cost base of the house, do I have a capital gain event this tax year(FY23/24)? Is this just for the house, not the land?
2. How is the cost of demolition treated. Is this added to the cost base of the house when calculating the capital gain?
3. I have been claiming capital works deductions for 30 years. Do I claim the remaining 10 years of capital deductions this financial year (FY23/24)?
4. When I do sell the land in FY24/25 is the capital gain calculation simply the difference between the cost base of the land plus selling costs and the amount received for the sale of the land?
Thank you in advance. I appreciate any thoughts on this matter.
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