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  • 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.

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    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


    ([$65 000 x 2.5%] x 3)

    =$160 000


    $4875 [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 Capital gains tax in this publication.

    Last modified: 28 Jul 2003QC 16187