On 30 June 2019, Mary, aged 50, disposed of the following assets that she owned. (a) A holiday house that was
purchased on 1 March 2011 for $300,000 and sold for $640,000. On 1 February 2014, Mary spent $35,000 adding an extension to the holiday house. She had built the extension after winning a legal dispute with the local council, which had alleged the extension would contravene council planning regulations. The dispute cost her $25,000 in legal fees. During the period of her ownership of the holiday house, she had rented it out for a total of six months during school holiday periods and used it herself for holidays at other times. During the period that she owned the holiday house she had paid a total of $80,000 in interest, rates and insurance. She had claimed $20,000, of the $80,000, in respect of the interest, rates and insurance, as a tax deduction in her personal tax returns in respect of the six months that she had rented the property. Previously, in November 2018, Mary had entered into negotiations to sell the holiday house for $600,000 to a prospective purchaser, who paid her a three month non-refundable holding deposit of $31,000. Mary's lawyer charged her $1,000 for advice in respect of the prospective sale. The prospective purchaser was unable to find finance and was unable to proceed. Mary retained the deposit. (b) On 1 July 2009, Mary had bought a family home. She lived in it until 30 June 2011, when she left Australia to go backpacking through Europe. She rented the house to a tenant for 7 years and returned to live in the house on 1 July 2018, where she lived until she sold the house on 30 September 2018. She made a capital gain of $950,000 on the house. She had not acquired another main residence since she purchased the house in 2009 and has continued to regard the house as her main residence while overseas.
REQUIRED: Calculate Mary's Total Net Capital Gain for the year ending 30 June 2019. Your answer should include references to appropriate sections of the Income Tax Assessment Act 1997 (Cth).
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