Calculating loss on sale

Question from Jamie updated on 3rd May 2013:

I recently sold an apartment for $312,000 which I'd purchased for $353,000 - sad but true. Is the agent’s commission deductable from the sale price before I calculate the gain/loss/depreciation recovered? The IRD's rental income booklet states "costs incurred in selling an asset, such as commission and advertising can be deducted from the sale price before you work out the loss or gain on sale". But does this relate to agent commissions? This would have quite an impact on depreciation recovered.

Our expert Mark Withers responded:

Yes, the costs of disposal are net off against the gross sale price to determine the disposal price of the asset. These costs are not tax deductible as such so this treatment confirms their status as capital costs of disposal and ultimately impact the capital gain or loss.

Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.

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