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  • 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, during the period you owned the property is excluded from the reduced cost base.

    Example

    The Keilys purchased a rental property on 1 July 1999 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 cent per annum from the date of purchase.

    The property was sold on 30 June 2002 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 (special building write-off) deductions]

    = $155,125

    See also Capital gains tax.

    End of example
    Last modified: 11 Dec 2019QC 16578