Hi,
I need clarification regarding my property and its cost base for Capital Gains Tax (CGT) purposes.
I purchased my apartment on 15 September 2016 for $450,000 and lived in it as my main residence until 18 January 2021. I then rented it out until I sold it on 12 April 2024 for $495,000.
My accountant has advised me to obtain a market valuation as of 19 January 2021 (the date the property began being rented) to determine the cost base. However, I believe this might not be necessary because the market value at that time was 110% lower than the original purchase price, and using the original purchase price as the cost base results in a more favorable tax outcome.
From my understanding, the ATO allows you to use the original purchase price as the cost base if the market value at the date of change of use is less than the original cost base.
Can you please confirm if:
- I am required to obtain a market valuation at the date of change of use (19 January 2021), even if it results in a higher taxable gain?
- I can simply use the original purchase price ($450,000) as the cost base without obtaining a market valuation?
This would help me avoid unnecessary expenses for a valuation if it’s not mandatory. I know they can cost up to $700!
Thank you for your help!
Kind regards,
Gerard
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