Joe acquired a house for RM250,000 in January 2017. In October 2018 improvements were made to the
Question:
Joe acquired a house for RM250,000 in January 2017. In October 2018 improvements were made to the house costing RM45,000.
The house was rented for RM2,000 a month in November 2018. Assessment and quit rent amounted to RM6,000.
In January 2020 Joe took out a mortgage loan to refinance the house, incurring an interest charge of RM20,000.
In March 2020 Joe tried to sell the house and took out an advertisement costing RM8,000. He obtained a buyer who paid a forfeitable deposit of RM50,000 to secure the purchase. When the buyer could not obtain a bank loan, the sale fell through and the deposit was forfeited.
Cracks appeared on the walls of the house and in August 2020 Joe recovered RM100,000 from the insurance policy for structural damage he had taken out in 2018. Joe sold the house in December 2020 for RM1,000,000.
i. Explain two reasons for each expense treated as not deductible in your computation.
ii. Evaluate the procedure and the date the tax liability calculated in (a) will be paid.
Expert Answer:
1 a The cost of improvements is not deductible because it is capital in nature an... View the full answer
