AUSTRALIAN TAX LAW

Abbies Investment Property

Abbie purchased an apartment on 1 March 2005, for $300,000, and paid stamp duty of $15,000. She moved into it immediately. On 1 March 2015, Abbie bought herself a house. She immediately moved into it and, thereafter, treated it as her main residence. From this time (1 March 2015), Abbie rented out her original apartment to a tenant. Its market value at the time was $500,000. In March 2018, with regards the apartment, Abbie paid $2,000 for repairing recently broken windows and $30,000 for renovating the kitchen. Abbie sold the apartment on 1 March 2021 for $650,000.

Abbie had paid $15,000 in council rates for the period 1 March 2005 up till 1 March 2015, and $6,000 for the period 1 March 2015 to 1 March 2021.

Required: For Abbie, consider the effect on her assessable income for receipts as follows:

1. Assume for Abbies apartment that the facts are different: she rented out the apartment from purchase (1 March 2005) till 1 March 2015, and then lived in it from 1 March 2015 until the time she sold it on 1 March 2021 (from the time she lived in it she treated it as her sole main residence for tax purposes). What difference would this make to the CGT consequences regarding Abbies apartment (4 marks)?