ato

 
 
Show download pdf controls
Show print controls

  • Reduced cost base

    Attention

    Warning:

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

    End of attention

    The amount of the capital works deductions you claimed or were entitled to claim for a building, other structure or improvement is excluded from the reduced cost base.

    Example

    The Keilys purchased a rental property on 1 July 2000 for $150,000. The property was built in March 1992 for $65,000. Therefore the Keilys can claim a capital works deduction at the rate of 2.5% per annum from the date of purchase.

    The property was sold on 30 June 2003 and the cost base (before any adjustment for the capital works deductions) was $160,000. The adjusted cost base is calculated as follows:

    $160,000 − [($65,000 × 2.5%) × 3]

    = $160,000 − $4,875 (equates to 3 years' capital works deductions)

    = $155,125

    End of example

    See also Capital gains tax in this publication.

    Last modified: 04 Dec 2005QC 27452