Tom, an Australian resident, passed away on 19 January 2021, leaving his house in Canberra to his daughter Mandy. The house was purchased by Tom on 8 May 1998 at a cost of $220,000 and he had lived in it ever since.

At the time of Tom's death, a market valuation showed that the property was worth $960,000. As Mandy's family and work commitments were based in Albury, she didn't want to move to Canberra to live in the house, so listed it with a local real estate for sale. On 28 July 2022 contracts were signed for the sale and the settlement of $910,000 occurred on 25 August 2022. The house had remained empty from when Tom passed away until it was sold.

 

In addition to the house in Canberra, Tom also owned a cabin in Narooma on the New South Wales South Coast, which he used for the occasional fishing trip but also as a holiday rental from which he earned income. The cabin had been purchased by Tom on 12 April 1984 for $35,000 and this was also left to Mandy in his will. At the time of Tom's death, the cabin had a market value of $220,000. Mandy and her family used the cabin for weekends and holidays up until they sold it on 5 March 2023 for $280,000 (contract date). It was never used as a holiday rental by Mandy.

 

Required:

What are the taxation consequences to Mandy, including the amount of any capital gain or loss, of selling the house in Canberra and the cabin in Narooma?
 Assume purchase and sale amounts include associated costs.

Answer rating: 100% (QA)

Taxation consequences to Mandy of selling the house in Canberra and the cabin in Narooma House in Canberra Cost base The cost base of the house in Can View the full answer