So many property investors remain unaware that if you own a property, you’re going to need to
know the current value of your property and the value on the day you acquired it.
Hey everyone, Andy from Duo Tax here.
If you’re selling your home or acquired property through
inheritance, you’ll need to obtain a retrospective property valuation report.
So, is this new to you? Have you just found out that you may need to
get a retrospective property valuation done but don’t know what it entails?
In this video, I'm going to break down the basics of the process and show you
how a retrospective property valuation works.
Before I start, I want to be clear that this video is for informational purposes. In no way should
you interpret this as tax advice. We always recommend you working with a qualified accountant
or tax agent to give you the best advice for your situation.
Retrospective valuations are also sometimes called a backdated or historical property valuation.
The point of this is to find out what the property was worth at a certain time in the past.
Most of the time, you’ll need a retrospective property valuation report because the ATO wants
you to disclose the capital gains you made on the sale of your investment property.
This is because your capital gains liability will depend on the property’s increase in value
from when it was purchased or first used as an investment property to the time it is being sold.
It’s especially important to get your hands on a retrospective property valuation report
if you’re unsure whether the price in the original sale agreement was an accurate valuation.
But that’s not the only situation where you may
need to obtain a retrospective property valuation report.
For example, if you’ve separated from your spouse and require a report for asset distribution
purposes, you’ll need to establish the property’s value on the date of the official separation.
Another example would be when a property is inherited. Again, for distribution purposes,
the property’s value must be identified on the date of the deceased individual’s death.
Now, how do you go about getting a retrospective property valuation? Well, you’ll need to
consult a property valuer to understand a retrospective valuation. In doing so,
they will undertake historical data analysis and a physical inspection.
For the historical data analysis,
the valuer will access a database that contains historical market value data.
In their analysis of the original valuation, the fluctuating property prices and the current sale
price, the property valuers will look at factors such as when the property was initially purchased;
how much the property was originally bought for and whether the original purchase price
was an accurate valuation based on the market conditions at the time.
They’ll also see if any extensive renovations were completed
after the original purchase date, like kitchen and bathroom renovations or room additions.
Once the data analysis is complete, a property valuer
will typically arrange a physical inspection of the property before finalising the report.
Physical inspections can influence the property’s overall value because the condition
of the property structure or pest issues can affect the historical analysis.
It’s not always required, but it does help give the property valuer
a good picture of details that would otherwise be overlooked.
Now, some people get an informal property appraisal to work out the original value
when you first bought the property; but it’s NOT a legally enforceable report.
On the other hand, property valuation reports are legally enforceable
reports and must be conducted by qualified and licensed valuers.
So, you can only submit a property valuer’s report to the ATO when working out your CGT liability.
So, there you have it.
We have a great team of experienced property valuers at Duo Tax,
so if you need a retrospective valuation for distribution purposes or to identify
your capital gains liability, make sure to get in touch.
I hope this video was helpful and that you
have a better understanding of the retrospective property valuations.
Make sure to check out our YouTube channel and subscribe for more property investment tips.
I’m Andy Tran from Duo Tax, see you next time!