Required: Discuss: The impact of the $3,000 lease premium for Abigail...
80.2K
Verified Solution
Link Copied!
Question
Accounting
Required: Discuss:
The impact of the $3,000 lease premium for Abigail (as far as CGT is concerned); and
The net capital gain for Abigail for the 2022-23 tax year.
Tammy had purchased a rental property on 1 January 2015 for $500,000. She paid stamp duty of $30,000. She immediately rented it out. Tragically, Tammy died on 1 February 2018, at which time her daughter Abigail inherited it. At the time, its market value was
$800,000.
Abigail continued to have the house rented out to a tenant. In March 2019, Abigail borrowed $60,000, which she spent on renovating the kitchen and bathroom of the house. The house was so nicely renovated that when looking for a new tenant in May 2019, the new tenant offered to give Abigail an extra $3,000 lease premium on top of the rent in exchange for being offered a 12 months lease.
In April 2023, Abigail decided to sell this house. She sold it to her brother Neil for $900,000, though the house was worth $1 million at this time.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
