Required: Discuss:

• The impact of the $3,000 lease premium for Abigail (as far as CGT is concerned); and
• The net capital gain for Abigail for the 2022-23 tax year.

Tammy had purchased a rental property on 1 January 2015 for $500,000. She paid stamp duty of $30,000. She immediately rented it out. Tragically, Tammy died on 1 February 2018, at which time her daughter Abigail inherited it. At the time, its market value was

$800,000.

Abigail continued to have the house rented out to a tenant. In March 2019, Abigail borrowed $60,000, which she spent on renovating the kitchen and bathroom of the house. The house was so nicely renovated that when looking for a new tenant in May 2019, the new tenant offered to give Abigail an extra $3,000 lease premium on top of the rent in exchange for being offered a 12 months lease.

In April 2023, Abigail decided to sell this house. She sold it to her brother Neil for $900,000, though the house was worth $1 million at this time.