The property professionals at Acumentis regularly undertake valuations for a variety of taxation purposes, on the advice received from the Australian Taxation Office, accountants and financial planners.
One such purpose is Capital Gains Tax (CGT), a tax charged on the profit obtained from selling an asset. In the instance of real estate, CGT may need to be paid on the sale of an investment property. Most personal homes (principal place of residence) are exempt from this, however other real estate including investment properties, vacant land, business premises and holiday homes are subject to CGT.
CGT must be reported in your income return and tax paid on any gains, being the difference between the purchase and sale price. A capital gains property valuation report is used to determine the increase or decrease in the value of the property and calculate the taxable gain or loss.
Current and retrospective valuations
Often property owners may have rented out their home after living in it as a primary residence, converting it to an investment property, or vice versa. If a valuation was not undertaken at the time it became, or ceased being used as an investment property, a retrospective valuation can be undertaken to determine market value of the property at this time.
The team at Acumentis undertake both retrospective valuations, to determine the property value when it was acquired or converted to an investment, and current valuations, to determine the value of a property in the current market.
Capital Gains Tax FAQ's
In the case of an investment or commercial property, holiday home or vacant plot of land, generally the price at which you sell the property will be used to calculate capital gain and any tax payable.
In some instances, including if the property is given away or passed onto a family member you will need to use the market value of the property instead of the sale price. This is when a property valuation would be required.
A valuation is the most accurate way of providing information on the value of a property. This can ensure the individual or entity selling the property is not charged at a higher tax rate than for what they are liable.
Your home (principal place of residence), is usually exempt from CGT unless it has been used to run a business, earn rent or it is more than two hectares of land.
Further detail about Capital Gains Tax can be found on the ATO website.