Property Purchase Costs and CGT: Maximise Your Cost Base in Australia

Think stamp duty is just another unavoidable expense when buying investment property? Think again. Every dollar you spend acquiring your property could be a dollar saved in Capital Gains Tax (CGT) when you sell.

You've just signed the contract on your dream investment property. The excitement is real, but so are the bills starting to pile up. Stamp duty, legal fees, building inspections, loan costs – it feels like everyone wants a piece of your budget. But here's what most property investors don't realise: these "annoying" costs are actually your secret weapon against future CGT liabilities.

At The Property Accountant, we see it all the time. Investors who meticulously research suburbs and negotiate purchase prices, only to throw away thousands in potential tax savings because they don't understand how acquisition costs work with CGT. Don't let this be you.

Your "cost base" is essentially everything you legitimately spent to acquire your property. When you eventually sell, the ATO allows you to subtract this cost base from your sale price to calculate your actual capital gain.

The larger your cost base, the smaller your capital gain, and the less CGT you'll pay.

Depending on your state and property value, stamp duty can easily run into tens of thousands of dollars. The good news? Every cent is added to your cost base.

State-by-state examples (for $800,000 property):

These aren't sunk costs – they're future tax savings waiting to be claimed.

Your solicitor or conveyancer's fees might seem modest compared to stamp duty, but they're equally valuable for your cost base.

Examples of eligible costs:

That $600 building and pest inspection you got before purchase? It's not just about avoiding nasty surprises, it's part of your cost base too.

What counts vs. What doesn't:

Counts	Doesn't Count
Pre-purchase building inspections	Inspections done after settlement
Pest and termite inspections	Routine maintenance inspections
Strata reports for units	-

While ongoing loan costs (like interest) are annual deductions, the upfront costs of establishing your investment loan can be added to your cost base.

Eligible loan costs include:

• Application fees ($600–$1,200)
• Valuation fees ($300–$800)
• Mortgage broker fees (0.6–0.8% of loan)
• Lender's Mortgage Insurance (LMI)
• Legal fees for loan documentation

Other Eligible Costs

• Buyer's agent fees
• Auction registration fees
• Pre-purchase reports
• Travel to inspect/settle (if solely for property purchase)

The ATO requires you to keep purchase records for potentially 25+ years (depending on how long you hold the property).

Keep these safe:

• Original contract
• Settlement statement
• Stamp duty receipt
• Legal and inspection invoices
• Loan setup documentation
• Travel receipts

• Mistake 1:Not asking for detailed invoices – vague invoices mean lost deductions.
• Mistake 2:Mixing personal and investment costs – always separate them.
• Mistake 3:Not digitising records – if it's not uploaded, it's as good as lost.
• Mistake 4:Missing legitimate travel costs – especially for interstate purchases.

🔹 Pre-Purchase Services (Planning Stage)

• Cost base forecasting: Estimate stamp duty, inspections, loan costs before you commit.
• Budget clarity: Separate upfront vs ongoing costs.
• Due diligence: Identify what's eligible for cost base.
• Property profile setup: Start uploading receipts the moment you buy.

🔹 Settlement Services (Capturing Stage)

• Settlement statement review to catch every eligible cost.
• Detailed cost base summary ready for future sale.
• Auto-organisation of invoices, contracts, and settlement docs under each property.
• ATO-compliant record structure built for the long haul.

🔹 Ongoing Support (Growth Stage)

• Annual cost base reviews to capture improvements.
• Pre-sale CGT planning so you sell at the most tax-efficient time.
• Portfolio-level cost base reporting across all properties.

David, a Sydney investor, bought a Melbourne property for $720,000. Initially, he only counted the purchase price.

By maximising his cost base, David cut his future CGT bill by over $10,700.

The Long-Term Perspective

Every extra dollar added to your cost base compounds into thousands saved in CGT down the track. For example, a $50,000 boost to your cost base could save over $9,250 in CGT (37% tax bracket, 50% discount).

Every property purchase is an opportunity to build a tax-efficient foundation. The Property Accountant makes sure you don't miss a cent—capturing, storing, and calculating every eligible cost automatically.

Instead of hoping your records survive 20 years, you get a complete CGT system:

• Automated record keeping
• Real-time cost base calculations
• Accountant-ready reporting

That means less tax, more savings, and total confidence when it's time to sell.