Valuation for Stamp Duty

We regularly provide property valuations for stamp duty purposes and our valuers are familiar with the process of compiling Stamp Duty Valuation reports that are acceptable to the State Revenue Office.

 

When do we pay Stamp Duty?

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We pay Stamp Duty, now renamed as ‘Land Transfer Duty’, to the Victorian State Revenue Office. Whilst the name has changed, the tax obligations remain the same, and many taxpayers still call the tax Stamp Duty.

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Stamp Duty is a tax that must be paid when the ownership of property changes (with some exceptions). The Victorian State Revenue Office (SRO) guidance stipulates that you may be required by the State Revenue Office to provide an independent valuation of your property, including when:

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• You are given property as a gift

• You purchase property from a friend, an associated person or an associated entity. For example, a mother sells to her son, or an individual sells to their own Super Fund.

• You purchase property at a discounted price or for some form of non-monetary consideration.

• Your purchase involves a fractional interest in property.

• You purchase property in connection with a business for a total sum of more than $1 million.

• The purchase price of your property is equal to or less than the property’s current capital improved value for rating purposes.

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The government has chosen not to rely on the sales contract price in these cases and instead requires the opinion of a valuer (accredited by the Australian Property Institute) to determine the market value of the property, and to be sure that the correct amount of Stamp Duty is paid.

 

Do I really need a property valuation? Will a letter from a real estate suffice?

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The Victorian State Revenue Office (SRO) guidance also states that - ‘The qualified valuer must also be familiar with the overarching principles and factors that need to be taken into account in valuing a property for duty purposes.’

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The SRO guidance also provides a number of circumstances under which a stamp duty valuation might be deemed unacceptable, and they include where:

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• Letters of appraisal by real estate agents are offered as a valuation, because these are not accepted as such by the SRO whose guidelines state - ‘Agents are typically not qualified valuers’ and ‘Real estate agents can be pressured by their clients to declare a property’s market value to be equal to or less than the property’s capital improved value for rating purposes’.

 

• The property sales used as evidence to support the property valuation are not worthy of direct comparison. For example, a property with ocean views valued by comparing it with properties that have no ocean views.

 

• The methodology used in a valuation is inappropriate

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• The valuation does not meet the professional standards set by the Australian Property Institute

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• There is no objective analysis of relevant comparable sales and/or rental data

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• The rent/s and yield adopted are outside acceptable market parameters. For example, where the rent is below market because of an association between landlord and tenant.

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• The property has not been valued with reference to the property’s highest and best use.

 

If the SRO considers that the value submitted understates the value of your property for duty purposes, it may refer the matter to the Valuer-General Victoria for valuation. You may be liable to pay the cost of the valuation if the Valuer-General Victoria determines a value that is 15% or higher than the one you have provided.