Reference no: EM133013950
Question - On 19 January 2003, Danielle signed a contract to purchase a rental property in Kenmore for $420,000.
On the same date, Danielle incurred stamp duty of $8,700 and legal fees of $900 in acquiring the rental property. Tenants immediately moved into the property and it has been fully rented ever since.
In order to finance the purchase of the property, Danielle entered into a 25-year loan agreement with Westpac Banking Corporation on 19 January 2003 to borrow $400,000. Borrowing costs (including bank establishment fees, stamp duty and a bank valuation fee) totalled $3,200.
Danielle provides you with a list of renovations to the property since she purchased the property:
Very soon after acquiring the property, Danielle discovered that the roof was badly rusted and needed urgent repair. She was not aware of this at the time of purchase. On 2 February 2003 Danielle spent $11,650 repairing the damaged roof.
On 21 September 2010, Danielle at the request of her tenant, Danielle laid new carpets totalling $8,800 in the three bedrooms and lounge area. The carpets are considered a depreciable asset and have a tax effective life of 10 years.
On 22 May 2020, Danielle sold the property for $640,000 under a contract of sale. Sales commission paid to the real estate agent on 12 May 2018 came to $10,350.
For the entire ownership period, Danielle advises you that she has claimed capital works allowance deductions totalling $58,000 pursuant to Division 43 of the ITAA (1997).
Lastly, Danielle informs you that she has carry-forward capital losses of $16,400 relating to the sale of 5,000 ANZ Ltd shares in 2017.
REQUIRED - Calculate Danielle's total net capital gain for inclusion in her 2020 income tax return. Danielle elects to use the CGT discount method.
Show all workings. Please show each cost item separately in your cost base calculations.