Question 6 (CGT) Ling inherited an empty commercial building from her mother in August 1992. Her mother had originally bought it in November 1986 for $40,000. It was worth $110,000 when Ling inherited it. In 2018 Ling spent $450,000 to convert the building into two apartments. What is the cost base (excluding indexation) of the building, if Ling were to sell the two apartments today? 1) $490,000 2) $450,000 3) $560,000 4) $40,000 5) $110,000
Answer is option 1 $490000
In case of inherited property, the cost of acquisition is equal to the cost paid by the previous owner. In the given case it is 40000 and additional cost of 450000 will be added to it.
Therefore cost base of building = 40000+450000=490000
Question 6 (CGT) Ling inherited an empty commercial building from her mother in August 1992. Her...