What Is a Retrospective CGT Property Valuation?
When people hear the words property valuation, they often think about finding out what a property is worth today.
However, not every valuation is about current market value.
A retrospective property valuation is prepared to establish the market value of a property as at a particular date in the past. This can be relevant where an accountant, solicitor or other professional adviser requires historical market evidence for a specific purpose.
One situation where this may arise is Capital Gains Tax.
A property owner may need to establish the property’s market value at an earlier point in time because of a change in ownership, change in use, inheritance or another event affecting the property’s tax position.
The keyword research supplied for Central Coast Property identifies retrospective CGT valuation searches as an important long-tail opportunity, including “retrospective CGT valuation”, “retrospective property valuation NSW”, “historical property valuation” and “property valuation as at a specific date”.
What does retrospective mean?
In simple terms, retrospective means looking back at a previous date.
A current valuation might answer:
“What is this property worth today?”
A retrospective valuation might answer:
“What was this property worth on the specified date?”
The distinction is important because property values can change substantially over time.
A retrospective valuation therefore needs to consider the circumstances of the property and the market relevant to the date being assessed.
When might a retrospective CGT valuation be required?
There are several circumstances where someone may be advised to obtain a historical property valuation.
These can include:
Converting a home into an investment property
A property may have originally been the owner’s home before becoming a rental property.
If a valuation is required in relation to the change of use, the relevant date may be the date on which the circumstances changed rather than today’s date.
If you have changed your former home into a rental property, the valuation date may be an important consideration. Our article, CGT Valuation When Your Home Becomes an Investment Property, explains this situation in more detail.
Inherited property and deceased estates
A beneficiary or executor may need evidence of the property’s value at a particular date associated with a deceased estate.
This can involve a property valuation at the date of death or another date specified by the relevant professional adviser.
For example, where a property has been inherited, an executor or beneficiary may need to establish its market value as at the date of death. You can read more about this in our guide to CGT valuations for deceased estates and inherited property
Family or related-party transfers
Property transferred between family members or related parties can create circumstances where market value information is required.
The keyword research specifically identifies CGT valuation family property transfer, CGT valuation related party transfer and market value property transfer CGT as relevant searches.
Other historical valuation requirements
A retrospective valuation may also be relevant where an adviser needs to establish market value at a particular point in the property’s history.
The exact requirements depend on the individual circumstances and the purpose of the valuation.
How does a retrospective property valuation work?
The first step is establishing the correct valuation date and purpose.
This is particularly important for CGT-related work.
Before contacting a valuer, speak with your accountant, tax adviser or solicitor and ask them to confirm:
- The purpose of the valuation.
- The valuation date.
- The property that needs to be valued.
- Whether a current or retrospective valuation is required.
- Whether there are any specific reporting requirements.
The valuer can then assess the property with the relevant date and purpose in mind.
What evidence can be considered?
A retrospective property valuation requires consideration of information relevant to the historical period.
Depending on the property and circumstances, this may include:
- Property characteristics.
- Location.
- Land and improvements.
- Comparable market evidence.
- Historical market conditions.
- Property records and available documentation.
- Information about changes to the property over time.
The availability and quality of historical information can vary, particularly where many years have passed since the valuation date.
For this reason, if you know that a historical valuation may be required, it is useful to start the process early.
Is a retrospective valuation the same as a backdated valuation?
The terms retrospective property valuation, historical property valuation and backdated property valuation are commonly used when people are searching for a valuation relating to a previous date.
However, the precise requirements of a valuation depend on its purpose and the instructions provided to the valuer.
This is another reason why clearly identifying the valuation purpose and date at the beginning of the process is important.
Why is the valuation date so important?
For CGT-related matters, the relevant date can be a critical part of the valuation instruction.
A valuation prepared for today’s market does not necessarily answer a question about the property’s value at an earlier point in time.
If your accountant or tax adviser has told you that a valuation is required as at a particular date, make sure that date is clearly communicated when requesting the valuation.
Need a retrospective CGT valuation on the Central Coast?
Central Coast Property provides professional property valuation services for a range of purposes, including circumstances where a historical or retrospective valuation may be required.
If your accountant, tax adviser or solicitor has recommended a retrospective property valuation, contact Central Coast Property to discuss the property, relevant date and purpose.
Planning a retrospective CGT valuation?
Make an early enquiry with Central Coast Property so the valuation requirements can be discussed and the appropriate information can be considered from the outset.
Contact Central Coast Property Advisory Service today to arrange a professional Commercial Property Valuation.