Greg Lockstone bought a beach house for $450,000, as his new home. The contract of sale was exchanged on the 23rd December 1989, but settlement only took place on the 16th April 1990. Legal fees, stamp duty and search fees amounting to $850, $1,000 and $250 respectively, were all incurred and paid on the 15th March 1990. On the 16th April 1990, Greg also paid $333 to an interior decorator.
On the 3rd July 1993, a dispute arose between Greg and his neighbour, Neville Littleton, over a boundary fence between Greg’s home and the neighbour’s property. Greg paid a solicitor $5,000 on the 10th October 1993, for settling the matter out of court. Greg is also a lawyer by training and estimates that he spent about 17 hours resolving the above dispute. He estimates that he would have charged $6,000 if he were to perform a similar service for a client.
On the 1st January 2000, Greg spent $44,000 adding a fourth bedroom on to his home. On the 1st March 2002, he spent $35,000 building an indoor swimming pool on the property. Unfortunately, Greg failed to consult his partner about the pool, and was forced to demolish it on the 1st September 2002. On the 20th February 2005, Greg spent $3,200 seeking council approval to build a third storey on to the house. The approval was not granted, as it would have negatively impacted the property values of his neighbours’ properties.
On the 1st February 2016, he spent $15,500 painting the outside of the house.
The house was sold on the 21st October 2018 for $1,600,000. Real estate agents’ fees and legal fees incurred on the date of sale amounted to $80,000 and $3,000 respectively.
Greg has an unutilised capital loss from the sale of an investment property in the previous income year in the amount of $200,000. Ignore any potential implications arising from CGT (Capital Gains Tax) event C1 happening in relation to the demolition of the pool on 1st September 2002.
It should be noted that due to financial hardship, Greg and his family moved into his parents’ home, in Sydney, and leased his beach house to tenants from the 1st September 2016 to 31st August 2018.
Attachments:
2019009942-tl….doc
