Adding to the cost base

My wife bought an IP last year to do up and resell.

The renovator lives in and pays rent. She coincidentally pays the renovator the same amount per week to renovate for a specific number of hours with any difference on a credit/debit account. We do cash, not accrual, accounting.

Question: Can she avoid claiming interest and all those other rental deductions and add them to the cost base instead? She will certainly declare the income from the rent but it would suit her much better to claim all the expenses she can against CGT when she flogs the joint.

Cheers,

Bob
 
HI

No, she cannot. The rent is income and as such must be declared. The cost of improvements will be added to the cost base of the property though when it is sold to reduce the Capital Gain.

Have fun

Dale
 
Back
Top