Announcements
Have you sold crypto, shares or property? Our new capital gains tax guide has info about cost bases, calculations & more! Still got questions? Ask the Community!

ATO Community

Re: Capital Loss Subdivision - Expense Allocation

Enthusiast

Views 715

Replies 4

Hi 

 

Seeking advice, community members' input would be very much appreciated !!!

 

Block of land purchased - new owner then decides to subdivide - 23% of the original block is put up for sale and the remainder 77% is retained by the owner and a new dwelling constructed.

 

Upon initial purchase, an old building straddled both sections of the land.  The owner demolished the old home and a retainer wall was erected between the two blocks, due to being on a very steep slope.

 

Costs involved demolition, retainer wall, sa water meter, septic to small block (requirement of subdividing), DAC Open Space Fee (requirement of subdividing).

 

In order to work out the gain/loss, we will work out purchase expenses (of the original block) as per the settlement statement and apportion 23% costs to the investment block.

 

Selling Expenses of investment block - 100%

 

Demolition of Original Home, Retainer Wall, Surveyor - 50% or 23% ?????

 

Septic, Open Space, Water Meter - 100% ?????

 

Title Lodgment - 50%

 

Thank you in anticipation!!!!!

 

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

Taxicorn Registered Tax Practitioner

Replies 1

In order to work out the gain/loss, we will work out purchase expenses (of the original block) as per the settlement statement and apportion 23% costs to the investment block.

 

Selling Expenses of investment block - 100%

Yes.

 

Demolition of Original Home,

See  https://www.ato.gov.au/law/view/document?locid=%27AID/AID2002514%27&PiT=20061220000001

 

Retainer Wall, Surveyor - 50% or 23% ?????

Wall  -  depends on where it is  =  % on each property

Surveyor  -  probably  50%  -  depends on what was actually done.

 

Septic, Open Space, Water Meter - 100% ?????

Depends on what was done and where

 

Title Lodgment - 50%

OK.

 

4 REPLIES 4

Devotee

Replies 1

Hi @Frances ,

 

The costs can be apportioned either on the basis of land area or market value.

 

Please note this paragraph in the ATO determination example 2:

 

If the blocks are of unequal market value, an apportionment of costs in proportion to the market value of the blocks would usually be a reasonable apportionmen.

 

Link to the ATO determination TD 97/3

 

https://www.ato.gov.au/law/view/document?DocID=TXD/TD973/NAT/ATO/00001

Enthusiast

Replies 0

Thank you, I am planning to go with market value as it will be more favourable.

 

 

Most helpful response

Taxicorn Registered Tax Practitioner

Replies 1

In order to work out the gain/loss, we will work out purchase expenses (of the original block) as per the settlement statement and apportion 23% costs to the investment block.

 

Selling Expenses of investment block - 100%

Yes.

 

Demolition of Original Home,

See  https://www.ato.gov.au/law/view/document?locid=%27AID/AID2002514%27&PiT=20061220000001

 

Retainer Wall, Surveyor - 50% or 23% ?????

Wall  -  depends on where it is  =  % on each property

Surveyor  -  probably  50%  -  depends on what was actually done.

 

Septic, Open Space, Water Meter - 100% ?????

Depends on what was done and where

 

Title Lodgment - 50%

OK.

 

Enthusiast

Replies 0

Thank you very much!