On 1 July in the current income year, Cassie borrowed $100,000 and purchased a block of land for $120,000. Cassie intended to build a house suitable for herself, her partner and their children to live in. Soon after Cassie received an offer of $270,000 for the land. The sale, and settlement, took place in May of the same (current) income year. Cassies interest expense was $15,000. Assume there are no other costs associated with the purchase of the land.

Required

Advise Cassie whether there is a capital gain or loss as a result of the above transactions and the amount of that gain or loss, if any.

In your response give reasons and refer to sections of legislation and cases, where relevant.