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  • Selling your rental property

    You may make a capital gain or loss when you sell or otherwise dispose of a rental property, unless you acquired it before CGT started on 20 September 1985.

    Even if you acquired the property before CGT started, you can still make a capital gain or loss from some capital improvements made since that date.

    You make a:

    • capital gain to the extent that the capital proceeds you receive are more than the cost base of the property
    • capital loss to the extent that the property’s reduced cost base exceeds those capital proceeds.

    If you're a co-owner of the property, you'll make a capital gain or loss in accordance with your ownership interest in the property.

    The cost base and reduced cost base of a property include the amount you paid for it together with some incidental costs associated with acquiring, holding and disposing of it (such as legal fees, stamp duty and real estate agent’s commissions). Amounts that you've claimed as a tax deduction or that you can claim as deductions are excluded from the property’s cost base and reduced cost base.

    Your capital gain or loss may be disregarded if a rollover applies – for example, if your property was destroyed or compulsorily acquired, or you transferred it to your former spouse under a family law settlement.

    Remember that when you sell your rental property, the time of the event (the time at which you make a capital gain or loss) is when you enter into the contract, not when you settle.

    See also:

    Depreciating assets

    If the sale of your rental property includes depreciating assets, you’ll need to apportion your capital proceeds between the property and the depreciating assets, and a ‘balancing adjustment event’ will happen to those assets.

    See also:

    Last modified: 17 Jul 2017QC 22172