Reduced cost base - calculating capital loss sale of property

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(Newbie)Newbie

28 Oct 2024

Hi.

My questions relate to the capital gain or loss on sale of a residential property held for 10 years, used as a private holiday home with no main residence exemption.

For a simplified example.

Purchase price and stamp duty = $1.2m

Holding costs during period of ownership not deducted elsewhere = $240,000

Incidental costs of buying or selling = $50,000

Capital proceeds = $1.45m

When I calculate the capital gain/loss using the cost base, less capital proceeds, I end up with a loss of $40,000.

When I complete a second calculation using the reduced cost base, that is removing the holding costs, less capital proceeds, I end up with a capital gain of $200,000.

When calculating the capital gain or loss, do I utilise the holding costs eg council rates, water rates, building insurances up to a nil capital gain result? In this example, to reduce the gain to nil, I utilise $200,000 of the holding costs of $240,000.
What happens to the balance of holding costs not utlised is the calculation of the capital gain? eg $240,000 less $200,000 = $40,000.

Many thanks for any kind assistance.

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