Question

Showing workings, calculate E’s overall net capital gain or loss (consider both the house and the shares but assume she has no other CGT events)

In March 2012 E inherited a house from her friend who had passed away on 1 October 2011. The house had a market value of $500 000 at that time. Steph’s friend had bought the house on 21 September 1984 for $150 000 incurring $500 in legal fees on purchase. E decided she did not want to live in the house so she rented it out until March 2018 when she sold it for $700 000. At the same time, she sold a parcel of shares in bank for $25 000 which she had purchased for $50 000 in June 2016.

Answer 1

Calculation of Capital Gain/Loss
Long Term Capital Gain on Sale of House		Amount	Amount
Sale proceeds from the sale of house		7,00,000
Less:
Cost of acquisition	1,50,000.00
Legal Fees	500.00	(1,50,500)
	Long Term Capital Gain on Sale of House		5,49,500
Long term Loss on sale of Shares
Sale proceed from the sale of shares		25,000
Less:
Cost of acquisition		-50,000
	Long term Loss on sale of Shares		-25,000
	Total Capital Gain for E		5,24,500
Note:
Due to lack of information about Indexation, the same has not been done.
If the shares are held for more then one year the Gain or Loss on sale of shares is considered to be Long Term Gain or Loss.
Cost of accquisition for the house inherited is the cost incuured by deceased