Joeacquired a four-bedroom house in Coorparoo under a contract dated 9 August 2018 for $770,000. On this

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Question:

Joeacquired a four-bedroom house in Coorparoo under a contract dated 9 August 2018 for $770,000. On this date, Joe also paid $18,000 in stamp duty and legal fees in relation to the purchase of this property.Joe immediately moved in and occupied the property as his main residence.

On 14 March 2020, after talking to friends he makes a decision to put one of his guest rooms (which has its own ensuite bathroom) up for rent for Air B'n'B. The room has been available for rent (and has been rented out) since that date. The guest rooms constitute 10% of the total area space of the entire house.

The market value of the house at 14 March 2020 had risen to $920,000 as per a written market appraisal acquired from his local real estate agent.

Joe sold the home at Coorparoo under a contract of sale dated 3 June 2021 for $1,040,000. Joe was charged $32,000 in sales commission by the real estate agent on this date.

REQUIRED:

Calculate Joe's net capital gain or loss in respect of the sale of his Coorparoo residence on 3 June 2021 for inclusion in his tax return. Show all workings.

Please note that marks will be deducted if students include extra items in the cost base that should not in fact be included.

Joe does not have any capital losses either in the current year or from any prior years.

Please quote appropriate sections of the ITAA (1936) or ITAA (1997) in your answer.

Number of Days:

Note: There are 583 days from 9 August 2018 to 14 March 2020 There are 447 days from 14 March 2020 to 3 June 2021 There are 1,030 days from 9 August 2018 to 3 June 2021