Glossary · Australian property
Cost base (CGT).
The total cost of acquiring, holding, and selling a CGT asset, used to calculate the capital gain at sale.
Cost base under ITAA 1997 s110-25 has 5 elements: (1) acquisition cost, the purchase price; (2) incidental costs of acquisition, including stamp duty, legal fees, conveyancing, inspections; (3) costs of owning, the non-deductible holding costs (interest, rates, insurance) where the property wasn't producing income; (4) capital improvements such as kitchen and bathroom renovations and additions; (5) incidental costs of disposal including selling agent commission, legal, advertising.
Elements 1, 2, 4, 5 add to cost base for ALL CGT calculations. Element 3 (non-income holding costs) only adds to cost base for property purchased post-Aug-1991 that was your PPOR for the period in question. Not for investment property where those costs were tax-deducted in the year incurred.
Reducing your taxable gain reduces your CGT bill. Every element in cost base needs documentation. Keep all settlement statements, conveyancer invoices, and renovation receipts.
Worked example
$700K purchase + $40K stamp duty + $5K legal + $30K reno + $12K agent at sale = $787K cost base. Sale at $1.2M = capital gain $413K (before discount).
Source
ITAA 1997 ss110-25 to 110-55.
Related terms
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