PPoR to IP

Discussion in 'Property Management' started by justStartingMan, 11th Nov, 2017.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    And thank you for PS LA 2005/8, butt I can't see anything relevant in this document. The link the ATO gives also does not work.

    The link Market valuation for tax purposes

    Also doesn't specifically state only a registered valuer's valuation is needed.

    An agents appraisal based on other sales data may in fact work.
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    lol - sorry guys :) Didn't mean for my little comment re using an REA for an appraisal to blow up :)

    Cheers

    Jamie
     
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  3. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    Prior to it being withdrawn, this was the source document. It was withdrawn because there was enough information in link. If you can't see anything relevant in this document then you must be reading something else. I didn't write it, but that's the reference.

    Correct, and if you reread my posts, I never said a registered valuer was needed. I'm not sure why this is still being raised.

    If you're still going to interchange the terms 'valuation' and 'appraisal' then this whole debate is pointless. There is absolutely no mention of appraisal in any of the documents or text and it still appears you're not understanding the difference. A valuation is based on methodology which is the primary driver for the acceptance of the figure provided with some onus on the qualifications of the person conducting the methodology to arrive at the valuation figure. You and I both know that legislation or legislative guidance is open to interpretation (this is why matters go to court every day) and although not explicitly stated, what is very clear is that the ATO is strongly suggesting a registered valuer be used.

    At the end of the day, you are free to try and use an appraisal by an agent if you wish and if you interpret what is written such that it would be accepted. Just as you are free to do whatever you want with any interpretation of any tax law. What matters however, is how the ATO interprets it and if, at the time of audit, they disagree then it isn't the ATO who will pay the price.
     
  4. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    Not at all! It's good for people to read this stuff and provide information to assist with decisions.
     
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  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Andrew are you licenced?
     
  6. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    So now that you've been backed into a corner with factually correct information that contradicts the line you were going for in your original question (the motivation of which, despite your claims to the contrary, was blatantly obvious and appeared more like trolling than genuine questioning) you're going to make it personal and start to question what qualifications I have in an attempt to remove the focus from the debate at hand? I would suggest that people reading, including myself, aren't that silly Terry.

    Although I have many licences, degrees and qualifications outside of what I post on here, they are not up for public discussion and if anything, the way and what you write in addition to your interpretation of the information has lead me to ask the same question of yourself.

    Let's close this down and move on.
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    How have I been back into a corner?

    I believe a real estate agent's appraisal could be enough if certain requirements are met.

    It seems you are giving tax advice but don't hold a licence. It doesn't matter if the advice is correct or not. I am licence and qualified.

    A 'qualified property investment adviser' is not a licence to give tax advice - or any advice.
     
  8. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    Q.E.D.!
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I am not qualified in grammar!
     
  10. craigc

    craigc Well-Known Member

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    Interesting discussion, after reading this I went back and reviewed info from REA that I am basing market valuation at time of conversion from PPOR to IP on.
    They used comparable basis and provided a written report outlining the property specifics, comparable sales, market data etc.
    Reviewed by my accountant as acceptable I am happy with this position.

    From the ATO website (underlined below) it would appear they concentrate more on the method used rather than the formal qualifications of the person issuing the valuation. A preference perhaps - but "strongly suggesting a registered valuer be used" doesn't appear from my reading.

    Market valuation for tax purposes

    Who may undertake a market valuation?
    For tax purposes, the acceptability of a valuation usually depends on the valuation process undertaken rather than who conducted it. However, there are some exceptions. For example, only a professional valuer may undertake a market valuation for GST margin scheme purposes or for determining non-monetary consideration for GST purposes
    Depending on the situation, a market valuation may be undertaken by a:

    • registered valuer
    • member of a recognised professional valuation body
    • director, for balance sheet purposes
    • person without formal valuation qualifications whose assessment is based on reasonably objective and supportable data.
    Except for the most straightforward valuation processes, valuations undertaken by people experienced in their field of valuation would be expected to provide more reliable values than those provided by non-experts.

    According to legal precedent, experts who assess market value should have specific knowledge, experience and judgment in that particular field. While professional qualifications may add weight to the valuer's opinion, they should also display personal integrity and competence. To ensure the objectivity of the report, the valuer should be independent of the party commissioning the report.

    The valuation process should be adequately documented; if it isn't, we may not accept the resulting value as a market value.
     
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  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    yay - I win the argument!
     
  12. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Just teasing you Andrew!
     
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  13. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    Yep, absolutely agree with all this and it has been my main point all along as this is the link I provided earlier and the information I’ve been trying to convey!

    The methodology is the most important part, not who does it. However it must still be a valuation. A valuation follows a set methodology for it to be a valuation (they are alway essentially the same with a numbers grading system and many different metrics.). An appraisal is usually only based on comps and best case you’ll get a CMA.

    To clarify, when I say it is clear that they are suggesting a registered valuer be used, this is my interpretation based on the fact they provide all the information you have posted, then go out of their way to post a valuers qualifications. There is no mention of a real estate agent providing one. Again, this is my interpretation but it does not say that explicitly.

    As I’ve also said all along, dot point 4 (above) technically means an REA could provide one but it really comes down to whether or not that ATO accepts it at the time! People are free to use an appraisal if they wish but you won’t come unstuck with a registered valuers valuation.

    Craig - if you want to be safe, call the ATO and have a discussion with them and maybe even get a private tax ruling? Better to do it now than later. I believe your REA would have provided you with an RP data generated CMA? We use those too and a lot of it automatically generated data that you can filter very easily to change the output. If you’ve never seen a registered valuers official valuation, you will see the difference. Your broker will also be able to book a (usually free) valuation via your lender. It’ll cost you nothing! Just say it’s for refi reasons but request a full val, not a desktop.

    Cheers!
     
    Last edited: 16th Jan, 2018
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