If you acquired a CGT asset after 13 May 1997, the cost base of the asset does not include:
- any expenditure on the asset that has been (or can be) allowed as an income tax deduction; this applies to all elements of the cost base, or
- heritage conservation expenditure and landcare and water facilities expenditure incurred after 12 November 1998 that give rise to a tax offset.
This also applies to certain assets-such as buildings or major capital improvements-that are treated as separate assets from the land because they were constructed or made on or after 20 September 1985 on land acquired before 20 September 1985. If those assets were constructed or made after 13 May 1997, the cost base does not include the above expenditure.
Note: Special rules for land
If you acquired land on or before 13 May 1997 but incurred expenditure on a building or major capital improvement that is not treated as a separate asset from the land (because the land was acquired on or after 20 September 1985) and the expenditure was incurred after 30 June 1999, the cost base of the property does not include any income tax deductions you can claim for the expenditure.
Example: Special building write-off deduction
Zoran acquired a rental property on 1 July 1997 for $200,000. Before disposing of the property on 30 June 2003, he had claimed $10,000 in special building write-off deductions. At the time of disposal, the cost base of the property was $210,250. Zoran must reduce the cost base of the property by $10,000 to $200,250.
End of example