7 Cost Base Mistakes That Cost Property Investors Thousands

Mistake 1: Forgetting the buyer's agent fee

If you used a buyer's agent, their fee is an incidental acquisition cost (Element 2 of the cost base under ITAA 1997 s110-25). On a $1.8M property, a 1.5% buyer's agent fee is $27,000 — reducing your capital gain by $27,000 and your CGT by up to $12,690 at the 47% rate.

Mistake 2: Missing capital improvements

Capital improvements (Element 4) include any expenditure that adds value to the property or extends its useful life. New kitchen, bathroom renovation, extension, pool, new flooring, ducted air conditioning — all eligible. Many investors only include the purchase price and stamp duty, missing tens of thousands in eligible costs.

Mistake 3: Confusing repairs with improvements

Repairs that restore the property to its original condition are deductible in the year incurred but are NOT in the cost base. Capital improvements that add value ARE in the cost base. The distinction matters: a $15,000 bathroom renovation that replaces an old bathroom is a capital improvement. Fixing a leaking tap is a repair. When in doubt, ask your accountant.

Mistake 4: Forgetting the building inspection and other pre-purchase costs

Pre-purchase costs incurred as part of the acquisition process are incidental acquisition costs. Building inspection ($800–$1,500), pest inspection, strata report, title search, loan establishment fees — all eligible. Small amounts add up: $3,000 in missed costs means $1,410 in unnecessary CGT at the 47% rate.

Mistake 5: Not keeping records

The ATO requires you to keep records of all cost base items for 5 years after the CGT event. Without records, you can't claim the costs. Use ClearGain's Cost Base Vault to store receipts, invoices, and contracts against each cost base item — with document status tracking so you know what's missing.

Mistake 6: Forgetting the depreciation schedule fee

The fee you paid for a quantity surveyor's depreciation schedule (typically $700–$1,100) is an incidental acquisition cost. It's a small amount, but it's often overlooked.

Mistake 7: Not getting a valuation for the Bucket B split

If you hold a grandfathered property past 1 July 2027, you need to split your gain at the cliff date. You can use the ATO's proportional formula, or get a formal valuation as at 1 July 2027. A formal valuation may produce a more favourable split — especially if the property appreciated significantly before the cliff. The cost of the valuation is also an eligible cost.

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