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Can capital gains tax be calculated based on property valuation when investment became residence?

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Newbie

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I purchased an investment property in August 2016 for 505k with the intention of it becoming my principle residential property at in the future. At the time of purchase my conveyancer advised me to get a property valuation done when I moved in as this is what capital gains tax would be calculated on. Family members also used a property valuation at time of investment ceasing & becoming residence for calculating CGT in 2012.

Have the rules changed since then?

I moved into investment property in July 2019 & had it valued at this time ($510k) Then sold in April 2020. My tax agent is saying that I must pay CGT based on sold price despite living in home for 8 months before sale and extensively renovating home to increase sale price (565k) Tax agent says valuation is irrelevant (aka I wasted my money and am now looking at owing the ATO a lot more than expected). Is tax agent right?
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Taxicorn

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@IsabelleOnABike 

 

Cost base will be initially the price you paid for it as it was used as an investment property from the start.

The cost base is made up of a lot of different expenses when you bought and sold the house:

https://www.ato.gov.au/general/capital-gains-tax/working-out-your-capital-gain-or-loss/cost-base/ele...

 

If it results in a 'Gain' you should be able to deduct some '3rd Element' costs from when you moved back in and should adjust the calculation to include number of days not rented/days owned.

 

You, unfortunately, would need to include any amounts that you did or could've claimed for capital works.

 

Rules have not changed.

You only need a valuation if your home ceases to be your home and then becomes an investment property.

 

I would be asking to see the capital gains calculations from your accountant.

 

 

1 REPLY 1
Highlighted

Most helpful response

Taxicorn

Replies 0

@IsabelleOnABike 

 

Cost base will be initially the price you paid for it as it was used as an investment property from the start.

The cost base is made up of a lot of different expenses when you bought and sold the house:

https://www.ato.gov.au/general/capital-gains-tax/working-out-your-capital-gain-or-loss/cost-base/ele...

 

If it results in a 'Gain' you should be able to deduct some '3rd Element' costs from when you moved back in and should adjust the calculation to include number of days not rented/days owned.

 

You, unfortunately, would need to include any amounts that you did or could've claimed for capital works.

 

Rules have not changed.

You only need a valuation if your home ceases to be your home and then becomes an investment property.

 

I would be asking to see the capital gains calculations from your accountant.