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  • Appendix 5-example of a rental property



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Example: Sale of a rental property

    In his own right, Brett purchased a run down rental property on 1 July 1997. The price he paid was $150,000 plus $20,000 in total for stamp duty and solicitors fees.

    He rented out the property after spending $2,500 on initial repairs.

    In the next few years, Brett incurred the following expenses on the property:

    Interest on money borrowed


    Rates and land tax






    As it was an old property, there was no special building write-off Brett could claim.

    When Brett decided to sell the property, a real estate agent advised him that if he spent around $30,000 on major structural repairs, the property would be valued at around $500,000. He had the repairs done and put the property on the market. on 1 April 2001, he sold the property for $500,000.

    Brett's real estate agents fees and solicitors fees for the sale of the property totalled $12,500.

    This is Brett's only capital gain for this year-and he has no capital losses to offset from this year or previous years. Brett works out his cost base as follows:

    Purchase price of property


    Stamp duty and solicitors fees on purchase of the property


    Capital expenditure (initial repairs)


    Capital expenditure (major structural repairs)


    Real estate agents fees and solicitors fees on sale of the property


    Cost base unindexed


    Brett deducts his cost base from his capital proceeds (sale price).

    Proceeds from selling the house


    Cost base unindexed




    Brett shows $285,000 at H Total current year capital gains at item 17 on his tax return.

    He decides the discount method will give him the best result, so he uses this method to calculate his capital gain:

    $285,000 × 50% = $142,500

    Brett shows $142,500 at A item 17 on his tax return.

    End of example

    Download Brett's capital gain or capital loss worksheetThis link will download a file here.

    Last modified: 06 Oct 2009QC 27417