Valuing subdivided land

Hi guys, we built 3 townhouses and I have moved into the last unit. The first unit's land is 252sqm, 2nd unit, 168sqm and my unit 240sqm (easement around 50sqm).

My accountant wants to assign the value on their sizes. The land is $1m, so cost base will be $252k, $168k and $240k. My unit's land is on an easement, slopes upwards, sideways and shape is irregular. The first unit is the best with street frontage and nice square flat block and no easements.

Is this a fair valuation since my land value is almost the same as Unit 1, the best unit? I know which i will choose if both land are on the market.

Thanks guys.

 

You can apportion the cost base in a reasonable way. There are many reasonable ways - and land area can be one of them.

Other options might work better.

Legal Database

 

Thanks Ross. Will it help to get a CPV to do a proper valuation and present it to my accountant?

 

I would be getting the values worked out by a valuer, not an accountant!

 

Get in touch with valuer and real estate agent to physically inspect site..

 

You need to have a reasonable argument backed up by facts.

A number of people can do this including an accountant. It is important to note that the ATO have indicated that an area basis is potentially reasonable.

we would accept any approach that is
appropriate in the circumstances of the
particular case, e.g., on an area basis or
relative market value basis.

So potentially your accountants advice is sound as part of your larger tax strategy. And depending on your project it might be all that is needed (when documented).

Thanks

 

You would want the method which gives you the best outcome. Your tax advisor could advise you on this.

 

It is unusual for three subdivided lots to possess identical homogenous land value based on M2 but sometimes it occurs. Easements, common property limits (driveways ?, gardens etc) and proximity to noise etc all influence value. Lots may have better or worse views etc. The front lot may be impacted by traffic noise, the rear lot may adjoin a undesirable property eg airport, school, factory or a freeway. The slope suggests reasons why property will not be homogenous in M2 value too eg. An accountant will not know any of that.

Accountants are not qualified to provide opinion on these things and lack the knowledge and skills. Thats the role of a property valuer. They can apportion the original cost (incl of other acquisition costs) into the three lots considering all these matters.

 

Here is the land in question. What do you guys think?

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Thanks so much for the feedback guys. Agree a lot to what you guys mentioned. There is no way my lot's value is the same as the one in front and I feel it's not proper to value it that way. I will speak to them again and get a valuer in. Thanks.

 

That is a diagram of a block of land - I think you should instruct a valuer.

 

Use a valuer, the agent is not a qualified valuer (in most cases).