Assignment task: Alex acquired a four-bedroom house in Wavell Heights under a contract dated 4 February 2018 for $860,000. Alex immediately moved in and used the house as his main residence.
On 19 May 2021, after talking to friends he makes a decision to put one of his guest rooms (which has its own ensuite bathroom) up for rent for Air B'n'B. The room has been available for rent (and indeed, has been rented out) since that date. The guest rooms constitute 20% of the total area space of the entire house.
The market value of the house at 19 May 2021 had risen to $950,000 as per a written market appraisal acquired from his local real estate agent.
Alex sold the home at Wavell Heights under a contract of sale dated 14 March 2022 for $1,260,000. Sales commission paid to a real estate agent who co-ordinated the sale of the property totalled $38,000.
REQUIRED:
Calculate Alex's net capital gain or loss in respect of the sale of his Wavell Heights residence on 14 March 2022 for inclusion in his 2022 tax return. Show all workings.
Alex does not have any capital losses either in the current year or from any prior years.