- 5 Marks
Question
Abena Morgan acquired two mansions (one at East Legon, Accra, and the other at Kwadaso, Kumasi) on 1 January 2010 at the cost of GH¢2,000,000 and GH¢11,500,000 respectively. Abena Morgan lives in the property at East Legon. On 10 March 2019, she used GH¢2,500,000 to convert part of this dwelling house into a self-contained flat and sold it to her younger brother for GH¢3,300,000.
The property at Kwadaso in Kumasi consists of two (2) detached bungalows, and she sold one of the bungalows to her elder sister for GH¢6,300,000, also on 10 March 2019.
The market value of the apartment sold to her younger brother at the time of sale was GH¢4,000,000, while the market price of the bungalow sold to her elder sister was GH¢8,750,000. She had used GH¢1,950,000 to refurnish the bungalow that was sold to her sister. The market price of the unsold bungalow on 10 March 2019 was GH¢11,000,000.
Required:
Compute the capital gains tax payable by Abena Morgan. (5 marks)
Answer
| Item | Amount (GH¢) |
|---|---|
| Sale of Self-Contained Flat | |
| Market Value of Flat | 4,000,000 |
| Cost of Conversion | (2,500,000) |
| Capital Gain on Flat | 1,500,000 |
| Sale of Bungalow | |
| Market Value of Bungalow | 8,750,000 |
| Cost (Proportionate) | (5,094,937) |
| Refurbishing Cost | (1,950,000) |
| Capital Gain on Bungalow | 1,705,063 |
| Total Capital Gains | 3,205,063 |
| Capital Gains Tax @ 15% | 480,759 |
- Tags: Capital Gains, Property Sales, Real Estate, Taxation
- Level: Level 2
- Topic: Taxation of Capital Gains
- Series: NOV 2020
- Uploader: Kwame Aikins