If an IP is sold for $300K and the cost base associated with the house is $100K, and it has been held for more than twelve months, how is the tax worked out?
eg. $300K sale proceeds, less cost base of $100K to be paid off the loan, leaving $200K to be divided by two = $100K added to the income of the owner in the year it is sold....
or
eg. $300K divided by two = $150K gain to be added to the income, regardless of whether the $100K cost base amount is paid off the loan.
I am getting confused . The more I try to think about it, the hard it gets.
I know I am getting confused because the $100K cost base can be paid off the loan, or not, and it really doesn't have anything to do with the loan. It all comes down to when the cost base is deducted (I think).
eg. $300K sale proceeds, less cost base of $100K to be paid off the loan, leaving $200K to be divided by two = $100K added to the income of the owner in the year it is sold....
or
eg. $300K divided by two = $150K gain to be added to the income, regardless of whether the $100K cost base amount is paid off the loan.
I am getting confused . The more I try to think about it, the hard it gets.
I know I am getting confused because the $100K cost base can be paid off the loan, or not, and it really doesn't have anything to do with the loan. It all comes down to when the cost base is deducted (I think).
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