On 1 July 1986, Sophia acquires an office block under a contract of purchase for $750000. She
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Sophia was immediately sued and incurred $50000 in legal costs defending her right to the office block against a person challenging the legal validity of her title. These costs were paid on 15 February 1987. Ongoing expenses during the ownership period were interest totalling $120000, deducting repairs to the property of $50000 and rates and taxes totalling $85000. On 7 April 1991, Sophia made capital improvements to the building totalling $75000.
On 1 September 2019, Sophia sold the office block under a contract of sale for $1,200,000. In doing so, she spent $7,500 in advertising costs in relation to the sale and paid sales commission to real estate agent of $48,000.
The four offices in the block had been rented out to tenants for the period of ownership.
Sophia wants to know whether she is better off using the indexation method for calculating her capital gain or the discount method. Based on your calculations, advise her.
Related Book For
South-Western Federal Taxation 2020 Comprehensive
ISBN: 9780357109144
43rd Edition
Authors: David M. Maloney, William A. Raabe, James C. Young, Annette Nellen, William H. Hoffman
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