Capital improvements & CGT on IP to PPOR

Discussion in 'Accounting and Tax' started by Dean2012ad, 19th Oct, 2013.

  1. Dean2012ad

    Dean2012ad DIY Investor

    Joined:
    29th Jan, 2011
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    Location:
    Sydney
    Hi there,

    Plan:
    - Purchase an IP and 2 years later move into said property making it my PPOR.
    - Make improvements to the property (i.e. new kitchen) after the property becomes my PPOR,

    Question: Are the invoiced Capital Improvements costs incurred in the 'PPOR years' able to be added to the cost base to reduce CGT when eventually sold?

    In other words, for the years or period of time when the property is not rented and it is my PPOR, do capital improvements offset the CGT payable?
    Or is it only applicable to the period of time when the property is rented...?

    Thanks for your help in advance...
     
  2. Dean2012ad

    Dean2012ad DIY Investor

    Joined:
    29th Jan, 2011
    Messages:
    49
    Location:
    Sydney
    I think I found my answer with a bit more thorough googling.

    Found here, http://www.bantacs.com.au/QandA/index.php?xq=314
    thanks Julia!

    Let me know guys if you have thoughts to the contrary...
     
  3. Terry_w

    Terry_w Member

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    Sydney, NSW
  4. Dean2012ad

    Dean2012ad DIY Investor

    Joined:
    29th Jan, 2011
    Messages:
    49
    Location:
    Sydney
    I appreciate concurrence backed by the above reference.

    Once again, thankyou Terry
     
    Last edited: 19th Oct, 2013
  5. pale ale

    pale ale Member

    Joined:
    5th Nov, 2012
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    Location:
    Karratha, WA
    Does this mean interest paid on the mortgage of the house can be added to the initial purchase price...quote.....

    There is one situation to do with options in which the incidental costs relating to the CGT event are modified: see section 112- 85.

    (4) The third element is the costs of owning the * CGT asset you incurred (but only if you * acquired the asset after 20 August 1991). These costs include:

    (a) interest on money you borrowed to acquire the asset; and

    (b) costs of maintaining, repairing or insuring it; and

    (c) rates or land tax, if the asset is land; and

    (d) interest on money you borrowed to refinance the money you borrowed to acquire the asset; and

    (e) interest on money you borrowed to finance the capital expenditure you incurred to increase the asset's value.









    Damn these things hurt my head trying to understand it all.



    Also, it says "get out the woolies dockets for disinfectant etc". Do you need to keep the dockets? We all know they fade and are a pain to scan / copy. Can I just keep a notebook and write date, description, cost??

    thanks for any advice