Question
Hi, the question is: X lived at 10 Wicket Place , he built his house there 10 years ago. He was left the block of
Hi, the question is: X lived at 10 Wicket Place , he built his house there 10 years ago. He was left the block of land (no house or buildings) at 10 Wicket Place when his grandmother died on 15 March 1983. On her date of death the land was valued at 200,000. X's house cost him $300,000 to built. He paid $12,000 in interest on the money borrowed. He sold his house in 2015 for 1.1 mil. According to me he lived in the house which was his primary residence (not used to produce income) and therefore I say that the house is exempt from capital gain as well as the land because of the date. He had to pay 4,000 in legal fees when the government unsuccessfully tried to compulsorily acquire part of his property. I say not deductible on tax return as it was not a deduction that was incurred because of earning income. A small shed was built on the property for 9,000 and was destroyed in a fire. The insurance pay 5,000. I think because its a separate asset on the property, even though it is his private residence it is possible that its a separate asset and should be declared in his tax return as a capital loss, but the cost base is under 10,000, so I wonder if it should be declared.... Then there is a question of a Porsche Boxster. According to me it is a vintage car, but a car is a car and is not subject to capital gain. But it is possible that because he has used it for his own enjoyment that it is a personal use asset. He can disregard the loss made, but it will be interesting to know if it is a personal used asset or a car which is exempt from capital gain. The question goes on to say that he has paid 14,000 to insure the car. My understanding is that if it is a personal used asset is that you can only declare the cost base less the proceeds to cac the gain or loss. I will appreciate thoughts regarding this question. I have done the assignment already but would appreciate thought about this to decide if I keep my assignment as is, or if I need to change....
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