2019 Money Magnet Symposium - Discover how to make, and keep, more money and achieve a financially empowered future
Viewing 19 posts - 1 through 19 (of 19 total)
  • Profile photo of kooringalkooringal
    Member
    @kooringal
    Join Date: 2003
    Post Count: 31

    Can anyone help? We have moved to a new PPOR and have decided to turn our old PPOR into an IP.

    On north side Brisbane, which has experienced huge capital growth in the past 2 years.

    Tax Dept says since it is the FIRST time we have left our PPOR to rent it, IF we get a professional valuation, we can use that as our ‘base price’ when we eventually sell the property, ie we can ‘lock in’ the capital gain that occurred in the house while it was our PPOR, without having to sell the house.

    The PROBLEM is – the ‘professional’ valuation, at a cost of $300, I believe to be WAY undervalued.

    IT’s a double lot in Wavell Heights, on a hill, great views to the gateway, airport, moreton bay. A 16 p block of land across the road sold for $205,000 about 18 mths ago at the start of the ‘boom’ (this ‘professional’ valuer DIDN’T know this – I forgot to tell him about it – and it didn’t figure in his paperwork) and this ‘valuer’, from a reputable company, but based in Toowong, and I believe not totally ‘au fait’ with the north side market, has valued our DOUBLE lot at $425 in today’s market.

    (Believe me, if I could buy a double lot in our street for $425 I would do it today!)

    We think it should be about $500,000 (which would still be ‘conservative’ but fairer to us) – we follow the market in the suburb closely and every thousand that it is officially ‘undervalued’ (in our opinion) now will cost us money in capital gains tax down the track.

    I have asked the valuer to reconsider, he won’t.

    IS my only option to pay another $200-300 to get another opinion from another valuer?

    Would it be reasonable to say to another valuer, hey, here’s a valuation I’ve already paid for, would you revise it and tell me if you think you can give me a valuation of $500 or more and if so, I will pay you and if not, I will pay you $50 for your opinion, but I am not prepared to pay another $300 for something I am not satisfied with?

    It sounds really petty, I know, but I think if I gave inadequate service, I could not expect to be paid full price, yet with valuers, they get paid in advance, and if their research is in the buyer’s opinion ‘inadequate’, and the valuation they come up with is considered to be tooooo conservative, the buyer has no comeback…

    Any suggetions from anyone?

    Thanks Kooringal.

    Profile photo of bcbc
    Participant
    @bc
    Join Date: 2003
    Post Count: 85

    Just suppose you were going thru a messy divorce and you wanted to buy your partner out, would you be happy with this valuation? well honestly would you?

    BC

    Profile photo of kooringalkooringal
    Member
    @kooringal
    Join Date: 2003
    Post Count: 31

    HI BC, I’d be delighted with this valuation! It would be in my favour by a mile. I don’t think my partner would accept it though and I’m afraid I wouldn’t blame him!

    I know if we sold the property, we would get $500,000 today and probably $600,000 if we wanted to hold out – but we wouldn’t sell it for that anyway, it will continue to appreciate because it is in a lovely position and it’s a good ‘retirement’ proposition.

    Are you saying I should just accept the valuation for the lesser amount and be ‘happy’ that at least ‘most’ of the capital gain that occurred while we were living there has been ‘recognised’?

    quote]
    Just suppose you were going thru a messy divorce and you wanted to buy your partner out, would you be happy with this valuation? well honestly would you?

    BC
    [/quote]

    Profile photo of DavidUDavidU
    Member
    @davidu
    Join Date: 2001
    Post Count: 101

    Hi Kooringal

    In this current market, valuers are extremely busy and in carrying out a valuation will just look at recent sales which in most cases are in excess of 6 months old. This is a problem in a fast moving market.

    To ensure you get the valuation needed, YOU have to do the homework for them; ie provide them with 5-6 recent comparable sales. Provide the address, type of property, sale price, real estate agent details and date of sale; ie provide COMPELLING evidence.

    All this should be handed to the valuer BEFORE the valuation, they will be grateful for this and in my experience this almost always ensures that you will get the valuation you need.

    There’s little point complaining after the valuation… the horse has bolted, although in some cases they can be persuaded to change their mind.

    I think it would be worthwhile doing the above and then paying for another valuation. If it costs $300 to pull out the extra $80k that you think the property is worth, that would be money worth spent?!

    All the best

    David U

    Profile photo of kooringalkooringal
    Member
    @kooringal
    Join Date: 2003
    Post Count: 31

    Thanks David U. I did give him the prices of a few houses near us, but not in writing with all the details, as you’ve suggested.

    I forgot to mention the vacant block across the road – just forgot – HELLO!!! I hear you say!

    I will do as you suggested and I guess I must just pay full price for a second opinion.

    (It takes me TWO DAYS to earn $300. It makes me ‘cross’ to pay $300 for a few hours work that I believe has NOT been well done.)

    In the long run, in our case, as you point out, it is still ‘worth’ it financially, I guess it’s the principle that his research was NOT worth $300, and I accept, but don’t AGREE that I should provide the ‘research’ for the next valuer and STILL pay him/her full price because he/she has the ‘ticket’ or rubber stamp I need to get something I am entitled to, it’s not like I’m trying to pull a ‘swifty’, I think what I want is a ‘fair’ thing but hey, who the hell knows, and maybe ‘fair’ is too big an ask, I just have to do what it takes to make sure I get what I want…

    thanks again for taking the time to reply and giving such sensible advice – nah, it’s not ‘fair’ but if at the end of the day, I end up getting what I think is ‘fair’, then maybe it’s just ‘the price’ that has to be paid…

    thanks, Kooringal

    quote:


    Hi Kooringal

    In this current market, valuers are extremely busy and in carrying out a valuation will just look at recent sales which in most cases are in excess of 6 months old. This is a problem in a fast moving market.

    To ensure you get the valuation needed, YOU have to do the homework for them; ie provide them with 5-6 recent comparable sales. Provide the address, type of property, sale price, real estate agent details and date of sale; ie provide COMPELLING evidence.

    All this should be handed to the valuer BEFORE the valuation, they will be grateful for this and in my experience this almost always ensures that you will get the valuation you need.

    There’s little point complaining after the valuation… the horse has bolted, although in some cases they can be persuaded to change their mind.

    I think it would be worthwhile doing the above and then paying for another valuation. If it costs $300 to pull out the extra $80k that you think the property is worth, that would be money worth spent?!

    All the best

    David U


    Profile photo of DavidUDavidU
    Member
    @davidu
    Join Date: 2001
    Post Count: 101

    Kooringal

    No probs. Real estate is essentially a game; play by the rules, you get what you want… Everybody is happy.

    Also forgot to add, in putting together comparable sales, EXCLUDE any recent sales that will not benefit you; eg property a few doors down sold cheaply due to a distressed sale will NOT add to your case, so do not include it in your handout.

    Once the valuer sees a clear pattern of sales and values, it’s generally a no-brainer.

    Also ensure you put the RE agent contact details (phone no) who sold the properties, the valuer will phone them up to check.

    All the best

    David U

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,173

    And don’t forget to tell the valuer what you want it for. Don’t worry about paying another $300, it isn’t that much money when you consider the savings. It may even be worth getting 3 done and choosing the highest.

    Terryw
    [email protected]

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
    http://propertytaxbook.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of JetDollarsJetDollars
    Participant
    @jetdollars
    Join Date: 2003
    Post Count: 2,435

    Kooringal,

    Just one month ago we have moved from our PPOR and rented a couple suburb away. Therefore, we turn our PPOR into an IP. The tax dept also asked us to get a professional valuation to value the property for base value due to cap gained in the past. I am very happy with the price that I got from the professional valuer.

    Here is how I did it and get high valuation price:

    1. Must use local valuer as they know the area much better than other
    2. Do a research in the area for the property similar to your with max sold value
    3. Contact valuer and explain to him your situation tell the valuer what you think it worth. If the valuer agreed then go ahead with that valuer. if not try another valuer until you are happy with the valuation price and finally ask him to come and inspect your PPOR.
    4. Prepare your PPOR as it is for sale, look clean and neat.

    5. Be their when the valuer come to inspect the property. Point out the good point about your PPOR. Also tell him the house next door if any sold at this particular price.

    6. Before he leave make sure ask the valuer what he think it is worth? and convince him to the value you want.

    I think you should spend another $300 for a new valuation price.

    Hope this will help.

    Regards

    Chandara

    Profile photo of comdomcomdom
    Participant
    @comdom
    Join Date: 2003
    Post Count: 92

    Hi,

    Hello everyone i am new to the forum and have been reading with interest and i have a question regarding the valuation, why must you lock in the valuation when you rent your PPOR if your intending to sell or not sell as i understand it you dont have to pay CGT if you sell the property whithin 6 years. Or am i tottally of the track and this has to do with Tax return.[?]

    Profile photo of kooringalkooringal
    Member
    @kooringal
    Join Date: 2003
    Post Count: 31

    [
    Hi Comdom, this is our ‘old’ ppor, we have a new one, the six year rule won’t apply to us – we can rent out our ppor for up to 6 years and still sell capital gains tax free – AS LONG AS WE ARE NOT MAINTAINING ANOTHER PPOR – and in our case, we are.

    SO, the cheapest and easiest way to ‘lock in’ the capital gain that occurred while it was our PPOR is to get a valuation, and use that as our future cost base if and when we want to sell the old ppor, which will then be an ip.

    Make sense?

    Doesn’t have anything to do with any ‘shonky’ on a tax return, it’s just about being liable for less capital gains tax in the future.

    quote]
    Hi,

    Hello everyone i am new to the forum and have been reading with interest and i have a question regarding the valuation, why must you lock in the valuation when you rent your PPOR if your intending to sell or not sell as i understand it you dont have to pay CGT if you sell the property whithin 6 years. Or am i tottally of the track and this has to do with Tax return.[?]
    [/quote]

    Profile photo of kooringalkooringal
    Member
    @kooringal
    Join Date: 2003
    Post Count: 31

    [Terry W and Chandara, thanks for the advice. K.

    quote]
    Kooringal,

    Just one month ago we have moved from our PPOR and rented a couple suburb away. Therefore, we turn our PPOR into an IP. The tax dept also asked us to get a professional valuation to value the property for base value due to cap gained in the past. I am very happy with the price that I got from the professional valuer.

    Here is how I did it and get high valuation price:

    1. Must use local valuer as they know the area much better than other
    2. Do a research in the area for the property similar to your with max sold value
    3. Contact valuer and explain to him your situation tell the valuer what you think it worth. If the valuer agreed then go ahead with that valuer. if not try another valuer until you are happy with the valuation price and finally ask him to come and inspect your PPOR.
    4. Prepare your PPOR as it is for sale, look clean and neat.

    5. Be their when the valuer come to inspect the property. Point out the good point about your PPOR. Also tell him the house next door if any sold at this particular price.

    6. Before he leave make sure ask the valuer what he think it is worth? and convince him to the value you want.

    I think you should spend another $300 for a new valuation price.

    Hope this will help.

    Regards

    Chandara

    [/quote]

    Profile photo of Elysium-MElysium-M
    Member
    @elysium-m
    Join Date: 2003
    Post Count: 259

    Hi guys,

    Kooringal, while I sympathise with your predicament – I really do – I have to respectfully disagree with the method that Chandara has suggested.

    Firstly, the valuer’s job is not to get the highest or lowest value for the client. The valuer’s job, and the valuer’s duty to the client, is to arrive at a fair and reasonable value.

    Secondly, even if a valuer is “local”, wouldn’t he or she still have to do some homework in order to be satisfied with the valuation that you want? It’s a chicken and egg thing. You’re telling the valuer that you won’t hire them unless they agree with the valuation they want, but if they are to do their job properly, they can’t say yes without doing the work they would have to do to arrive at a valuation.

    Thirdly, if there are in fact valuers who are willing to accommodate the method you described (ie agree on a value over the phone or without thoroughly researching comparable recent sales in order to get the job), then wouldn’t that degrade the integrity of valuations?

    Don’t get me wrong – I totally agree with what Chandara and others said about getting the research done and providing written evidence, as well as doing your best to persuade the valuer to agree with your opinion on your property’s valuation. But it’s this “valuer-shopping” that worries me. One of the key causes for the finance brokers scandal in WA (where thousands of investors, many of them retirees and pensioners, lost their life savings investing on dodgy property development deals with pumped up valuations) were valuers who were prepared to compromise their integrity in exchange for getting the job. I’m not saying it’s going to come to this, but if more and more valuers started doing this kind of thing, the reliability and credibility of valuations will start becoming eroded.

    That’s just my view. You obviously have the prerogative to adopt a different view.

    Cheers
    M

    Profile photo of JetDollarsJetDollars
    Participant
    @jetdollars
    Join Date: 2003
    Post Count: 2,435

    Elysium-M,
    I’m respected your view point, but isn’t it this world is all about? Anyway, good luck with your investing.

    Question:

    Quoted from kooringal:


    Hi Comdom, this is our ‘old’ ppor, we have a new one, the six year rule won’t apply to us – we can rent out our ppor for up to 6 years and still sell capital gains tax free – AS LONG AS WE ARE NOT MAINTAINING ANOTHER PPOR – and in our case, we are.


    in my situation, I rented it out my PPOR in July’03 and currently renting. As I am not maintaining another PPOR, does it mean I will get the assumption from capital gains tax?

    Any help will be appreciated in advance

    Regards

    Chandara

    Profile photo of 55chev55chev
    Participant
    @55chev
    Join Date: 2003
    Post Count: 8

    Kooringal,

    I would reccomend getting another valuation done. I bought an investment property in april this year and the guy who done my valuation was totally un-professional. He thought he was there do sign off the final payment to our builder for our extension that we had just done. After I highlighted the fact he was there for a valuation he said he would return to do it properly. He didn’t and the Valuation was well below what it should have been.

    I was a little upset as in the end I had to pay mortgage insurance due to the fact I was over 80% LVR. Even when I explained the situation to the bank they were more prepared to go with his valuation than hear my story even though I felt I was far more accurate.

    Well 3 months later I am buying another investment property and the valaution on my house with nothing being done to it since the last valuation 3 months ago has risen by $45,000. This valuation was done by a different Valuation company but with the same bank – that is why I would go for a second opinion.

    Carl

    Profile photo of DavidUDavidU
    Member
    @davidu
    Join Date: 2001
    Post Count: 101

    Hi

    I 100% agree with Elysium-M.

    In a situation whereby you employ the services of a valuer who will effectively ‘roll over’ for you , there are two (or more) possible consequences

    i) The valuer will get blacklisted by the lending institution

    ii) The valuer will sue you

    This is what is happening in NZ to ESC (RichMastery)who are currently being sued by 5 blacklisted valuers for this type of behaviour.

    Cheers

    David U

    Profile photo of kooringalkooringal
    Member
    @kooringal
    Join Date: 2003
    Post Count: 31

    chandara, as far as I know, if you only have ONE ‘PPOR’, you can rent it out for up to 6 years, and if you sell, it is CGT free.

    check with the tax office about how you maintain the rented property as your ‘ppor’ – do you still have to be enrolled for voting there? divert your mail from there? dunno. maybe someone else in here will know?

    if you NEVER intend to move back into your ppor, maybe you get a valuation as soon as possible, to lock in any capital gain that occurred BEFORE it was rented for the first time?

    that way if you rent it for the next 10 years, you’ll pay CGT on a proportional basis, but the ‘base year’ will be the valuation from when it ceased to be your ppor and when you started renting it.

    the tax office are great, if you get a helpful person, for ‘checking’ on these options.

    good luck, kooringal

    quote:


    Elysium-M,
    I’m respected your view point, but isn’t it this world is all about? Anyway, good luck with your investing.

    Question:

    Quoted from kooringal:


    Hi Comdom, this is our ‘old’ ppor, we have a new one, the six year rule won’t apply to us – we can rent out our ppor for up to 6 years and still sell capital gains tax free – AS LONG AS WE ARE NOT MAINTAINING ANOTHER PPOR – and in our case, we are.


    in my situation, I rented it out my PPOR in July’03 and currently renting. As I am not maintaining another PPOR, does it mean I will get the assumption from capital gains tax?

    Any help will be appreciated in advance

    Regards

    Chandara


    Profile photo of JetDollarsJetDollars
    Participant
    @jetdollars
    Join Date: 2003
    Post Count: 2,435

    Kooringal,

    Thanks for the info, will check with the ATO soon.

    Kind regards

    Chandara
    [Keep going, you’re nearly reach the end of financial freedom]

    Profile photo of retired@31[email protected]
    Member
    @retired-31
    Join Date: 2003
    Post Count: 7

    My experience with valuers is thay tend to be conservative. Possibly in-line with the financial institutions policy? (there is a history lesson here that I won’t go into) I would not say they roll-over to the lenders wishes but they do get work from them if you know what I mean.

    So giving the valuer proof of the property next door selling for …. is factual and perhaps the valuer being between a rock and a hard place may give you a more accurate price, in your eyes at least?

    So putting forward proof is not an attempt to get an inflated price and erode the ‘valuation system’, but it increases your chances of getting what you know is closer to the correct price based on your facts.

    I suspect it still will be conservative though. lol

    Regards
    Tony

    Profile photo of MelanieMelanie
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    @melanie
    Join Date: 2003
    Post Count: 382

    Hi Kooringal,

    I’ve just found this forum recently and hope that you went well with this problem. I know the area pretty well and think you are right about your val being way too low. Did you get another valuation done?

    The truth of valuers is yes they are endeavouring to do the right thing by the banks, first, and the homeowners second and SOME of them are really lazy and just ring a local RE agent they know and get their 2 cents worth and hey presto it’s done. Terry’s right – pay three valuers and you’re guaranteed of three different results, and whose right?!? Especially in your area which had 70%+ growth over the last two years.

    If you haven’t already – make sure you get the sales facts re the area eg via the home price guide on the http://www.realestate.com.au site. I find it superb as it gives you two years sales data of every single property in a postcode for about $50 and it’s hard data that a sensible valuer will take on board and use. It’s more solid than other RE Agents heresay. They even mark which sales they think fall outside the norm for the area, hence the ‘distressed’ or related party ones David U mentions, which is handy.

    Good luck, will be interested to hear how you went. [8)] BTW – a broker can organise free vals for you with your intended lender in some instances, eg with ANZ.

    Cheers,
    Mel

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