Cost Base Records for Australian Property: The Evidence That Matters Years Later

Property is often held for decades, while the capital gains calculation is prepared after records have been lost and memories have faded. A complete cost base can include much more than the contract price, but each amount needs legal eligibility and supporting evidence.

The five cost-base elements provide the framework. Amounts already deducted or otherwise excluded cannot simply be added again.

Acquisition and disposal costs

Potential amounts include purchase price, stamp duty, conveyancing, buyer’s agent fees, valuation, title and search costs. Disposal costs can include agent commission, advertising, legal fees and auction costs.

Settlement statements should be retained with invoices because some adjustments are not cost-base expenditure.

Ownership costs

Certain non-deducted ownership costs can form part of the third element for eligible assets acquired after the relevant commencement date. These can include interest, rates, land tax, insurance, repairs and maintenance where the statutory conditions are met.

An amount cannot be both deducted and included in cost base. Rental schedules and prior returns are therefore essential.

Improvements and capital expenditure

Renovations, extensions and enduring improvements can form part of cost base where the rules are satisfied. Even where an improvement no longer exists at sale, its treatment depends on the applicable cost-base element and circumstances.

Differentiate improvements from repairs and maintain project-level invoices, contracts, approvals, plans and payment evidence.

Capital works adjustments

Capital works deductions claimed or claimable can reduce cost base. Failing to adjust can overstate cost base; deducting the same expenditure and retaining it in cost base can produce double benefit.

Obtain historical depreciation and capital works schedules and reconcile them to returns.

Ownership and main residence evidence

Record legal and beneficial ownership, occupation dates, rental periods, spouse choices, business use and market values when first used to produce income. These facts determine exemptions and apportionment as well as cost base.

Travel records, leases, utility bills and electoral or school records can corroborate occupation.

Practical takeaway

Maintain a permanent digital property file from acquisition to sale. A yearly cost-base roll-forward is more reliable than reconstructing decades of expenditure at settlement.

Official sources and further reading

• Australian Taxation Office: Cost base of assets
• Australian Taxation Office: Cost base adjustments for capital works
• Australian Taxation Office: How to claim rental expenses
• Australian Taxation Office: Treating a former home as your main residence

CGT