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R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Capital Gains and Losses
Satisfied Customers: 263
Experience:  Over 20 Years experience in resolving tough tax cases
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I purchased my home in 1972 for $17,000. It has been my

Customer Question

I purchased my home in 1972 for $17,000. It has been my principal place of residence since then.
I am considering demolishing the house, and building a duplex ( 2 residences with separate title each). Anticipated build cost is approximately $500,000.
I do not intend to live in either residence but will sell both.
I have received differing opinions re my liability for capital gains tax.
Can you please advise me.
Thank you
Brian Bragg
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

It is a tricky question and I can imagine different experts will interpret it differently. First you will need to determine your basis. Since you are replacing one property with another, your basis will be original purchase price, plus capital improvements, demolition cost, cost of rebuilding plus expenses of sale.

You will deduct your basis from the selling price to calculate your long term capital gains. You will not be able to claim the exclusion if you don't live in the new building for at least 2 years.

Customer: replied 1 year ago.
Thank you
Expert:  emc011075 replied 1 year ago.

You're welcome.

I just noticed, that your country is Australia. Are you in US or Australia?

Customer: replied 1 year ago.
I am in Australia - is your response relating to USA Capital Gains Tax law?
Expert:  emc011075 replied 1 year ago.

I am sorry, I didn't realize it was Australia.

I will opt out to give another expert a chance to respond.

Customer: replied 1 year ago.
Thank you. Do you have experts in Australia or should I just cancel ?
Expert:  emc011075 replied 1 year ago.

We are independent contributors and I don't know if an Australian expert is online right now. If you like you can wait and you will be notified by e-mail if somebody picks up the question.