Valuations for CGT

I'll have tenants moving into my former PPOR tomorrow and I've not had a formal valuation done yet. If I sell the property in the future and incur CGT, I assume that it will only apply to the increase in value from tomorrow.

I am just wondering what is an acceptable form of proof of the current value? My bank valued at $700k but that would mean that I am achieving a yield of 4.83% on a large, near new house in Eight Mile Plains, Brisbane. If that were the case, I'd be buying as many as I could afford!

My PM has advised that she is a licenced REA and that she will happily provide a market value estimate.

Will that be sufficient proof to calculate CGT in the future or should I be engaging a licenced valuer?

 

If its free the answer is Yes. It does not need to be a formal valuers opinion and a agent opinion will suffice. Ideally it should reflect the upper end of the market range rather than the lower end.

 

Thanks for that. I'd much rather save the $400 and the risk of a valuer going all conservative on me.

 

I thought a licenced valuer valuation was required? An agent could quote anything?

I will need to do the same thing, but in retrospect...

 

Hopefully the agent will quote a high end opinion too. Seek a few agent quotes and keep the highest.

 

I think the licensed valuer is just required for gst purposes if applicable. For cgt i dont think a valuation is required, you just need to have a reasonable basis for your calculation and an RE val is useful for that purpose.

 

An apportionment is required and the ATO consider a valuer is required in the margin scheme rulings as an example.

 

My professional advice told me a registered valuer was required. It costs around $500, I guess not so much in the scheme of things...

 

I stand to be corrected...

A licenced valuer is not required. Just a reasonable arms length valuation.

If the place is truly worth $500k and you get a REA mate to give you a $250k/$750k valuation then you might be in trouble if questioned. If the valuation comes in at $450k/$550k I don't think the ATO would notice.

 

Legislation is s118-192
INCOME TAX ASSESSMENT ACT 1997 - SECT 118.192 Special rule for first use to produce income

No mention of a registered valuer being needed.. Just says "Market Value" so this could be worked out on a reasonable basis.

Here are the views of the ATO:
Market valuation for tax purposes | Australian Taxation Office

 

Thank you Terry!