1. What Is Cost Base Of Property?

The cost base of a property represents the total capital investment in an asset for tax purposes. It is used to calculate capital gains tax when the property is sold. The cost base includes the original purchase price plus any associated costs, minus any depreciation claimed.

2. How Does The Calculator Work?

The calculator uses the cost base formula:

Where:

• \( Purchase\ Price \) — Original purchase price of the property
• \( Costs \) — Additional costs associated with acquisition and improvement
• \( Depreciation \) — Total depreciation claimed on the property

Explanation: This calculation determines the adjusted cost basis for capital gains tax purposes when selling a property.

3. Importance Of Cost Base Calculation

Details: Accurate cost base calculation is essential for determining capital gains tax liability, ensuring proper tax compliance, and maximizing investment returns by accurately tracking property investment costs.

4. Using The Calculator

Tips: Enter the original purchase price in dollars, all associated costs in dollars, and total depreciation claimed in dollars. All values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What costs can be included in the cost base?
A: Acquisition costs (stamp duty, legal fees), improvement costs (renovations, extensions), and holding costs (certain borrowing expenses) can typically be included.

Q2: How does depreciation affect cost base?
A: Depreciation claimed on the property reduces the cost base, which may increase capital gains tax when the property is sold.

Q3: Is cost base the same for all property types?
A: The basic principles are similar, but specific rules may vary for residential, commercial, and investment properties.

Q4: When should I calculate cost base?
A: Cost base should be calculated when purchasing a property, making improvements, and definitely before selling to determine tax implications.

Q5: Can cost base be adjusted after purchase?
A: Yes, cost base can be adjusted for capital improvements, but cannot be reduced below certain limits for capital works deductions.