Reduced cost base



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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.


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 x 2.5 %) x 3]

= $160 000 - $4875
[equates to 3 years capital works (special building write-off) deductions]

= $155 125

See also Capital gains tax.

Last modified: 18 Jul 2008QC 16578