Show download pdf controls
  • Deductions affecting capital gains tax cost base calculations



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

    End of attention

    In working out a capital gain in respect of a rental property you acquired after 13 May 1997, the cost base does not include any expenditure you have claimed or are entitled to claim as a tax deduction.

    If you acquired land before 13 May 1997 but constructed a rental property on the land after that date, the cost base will not include any expenditure on the rental property incurred on or after 1 July 1999 for which you have claimed, or are entitled to claim, a deduction.


    The Coulsons purchased a rental property on 1 July 1998 for $150,000. The property was built in March 1992 for $65,000. Therefore the Coulsons are entitled to claim a capital works deduction (special building write-off) at the rate of 2.5 per cent per annum from the date of purchase.

    If they sell the house on 30 June 2001, the cost base will be calculated as follows.

    $160,000 (see note) − ([$65,000 × 2.5%] × 3)

    = $160,000 − $4,875 [equates to 3 years capital works deductions (special building write-off)]

    = $155,125

    Note: For the purpose of this example the cost base is taken to be $160,000.

    See also:

    End of example
    Last modified: 28 Jul 2003QC 16187