Your client, Dorothy Mustard, an academic, is moving to the UK where she has taken up a professorial appointment at London School of Economics. She has sold all her Australian assets prior to moving during the current financial year. Advise Dorothy, with references to relevant cases, legislation and Rulings, of the capital gains tax consequences of the following:

1. Sale of her home at Newtown for $1,200,000. She purchased the home in 1991 for $187,000 and in 2001 spent a further $350,000 in renovations.

2. Sale of her holiday home in Vincentia for $780,000. She purchased this property ten years ago for $250,000. To fund this purchase she took out a loan on which she paid interest in total of $137,000. During the period of ownership her council rates were $850, the water rates were $600, insurance was $1,200 a year. She also built a garage on the property at a cost of $15,000. Her costs of acquiring the property were $1,500. Her costs of selling the property were $5,500. Only her family use this property.

3. A grand piano that she purchased in 2004 for her personal use for $40,000. She sold the piano to neighbour for $20,000.

4. A painting, by a now well-known Australian artist, that she purchased in 1984 for $1,000 was sold at auction for $850,000. Her auction fees were 7.5% of the sale price. She had also insured the painting at an annual cost of $300.

5. Her 5,000 shares in NRMA that she purchased in the current tax year for $5.50 each and sold for $6.50 each.

NB: You are not required to calculate her tax payable.

Answer rating: 100% (QA)

Answer 1 Sale of her home at Newtown for 1200000 She purchased the home in 1991 for 187000 and in 20... View the full answer