Arashdeep is a computer programmer who has purchased a block of land in Point Cook, Melbourne on 1 January 1983. On 30 September 1987, Arashdeep built a two- storey house on the land. At the time, the land was valued at $120,000 and the cost of construction was $80,000. The property has been rented out since construction was completed (Not a primary residence of Arashdeep). On 30 March 2020, Arashdeep sold the property at auction for $950,000. (a) Based on the information above, determine Arashdeep's net capital gain or net capital loss for the year ended 30 june of the current tax year (19/20). (b) How would your answer to (a) differ if Arashdeep sold the property to his Son for $200,000? (c) How would your answer to (a) differ if the owner of the property was a company instead of an individual?

Arashdeep is a computer programmer who has purchased a block of land in Point Cook, Melbourne on 1 January 1983. On 30 September 1987, Arashdeep built a two- storey house on the land. At the time, the land was valued at $120,000 and the cost of construction was $80,000. The property has been rented out since construction was completed (Not a primary residence of Arashdeep). On 30 March 2020, Arashdeep sold the property at auction for $950,000. (a) Based on the information above, determine Arashdeep's net capital gain or net capital loss for the year ended 30 june of the current tax year (19/20). (b) How would your answer to (a) differ if Arashdeep sold the property to his Son for $200,000? (c) How would your answer to (a) differ if the owner of the property was a company instead of an individual?

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter16: Property Transactions: Capital Gains And Losses

Section: Chapter Questions

Problem 28P

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Alex is a carpenter who purchased a vacant block of land in Sydney on 1 October 1980. On 1 September1986, Alex built a house on the land. At the time, the land was valued at $110,000 and the cost ofconstruction was $100,000. Immediately, after the construction finished, the property has beenrented out. On 1 March 2019, Alex sold the property at auction for $1,400,000.Required:With reference to relevant legislation/case law, determine:a) Alex’s net capital gain or net capital loss for the year ended 30 June 2019 using both Discountmethod and Indexation method.show your working. b) How would your answer to a) differ if the owner of the property was a company instead of Alex?
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