What Is Capital Value Of A Property in Australia: Why it’s Vital

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If you’ve purchased a property in Australia, have decided to sell it as an Australian expat, and want to get it valued, there’s an important value that you’ll need to understand. This value is the capital value.

The capital value is important. Since it’s such a critical figure, many property owners contest this value and, in situations like these, objections can be raised and made with the valuer general. This just shows just how crucial the capital value can be!

So, if your aim is to sell your property, make changes to your property, or get it valued, you must understand the answer to the question “what is capital value of a property in Australia”. And you’ll find the answer to this question and many others related to capital value in this article!

What is capital value of a property: Capital value explained

The capital value of a property refers to the amount or sum that a property might be sold for in circumstances where the property is sold under conditions that are reasonable. It’s the total value of your property, including the land.

Keep in mind that, although you might see the term capital value abbreviated to “CV” on your council rates documents, don’t confuse this with the term “council value”! 

What is capital value of a property in terms of capital improved value?

In the context of capital value, there is also another term that you will need to be aware of, which is capital improved value. This is a term used to describe the land’s market value and the valuation of the building, in addition to any improvements or enhancements done to the property.

What Is Capital Value Of A Property in Australia Why it’s Vital

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What is capital value of a property when compared with capital return?

In answer to “what is capital value of a property” compared with capital return, where capital value refers to the realised sum ordinarily gained when valued and put up for sale under conditions that are reasonable, capital return refers to how capital value might change between different periods, minus the capital expenditures.

Capital return, in this sense, is portrayed as a segment or percentage of the capital value, minus the partial sales and a segment of the net income.

What is capital value of a property in Australia used for?

Capital values are useful for selling property, but they have other uses as well.

The capital value of a property can be used to calculate a property’s rates, which can be calculated with a simple sum: Just multiply the assessed annual value of your property by the council rate. Here’s a quick example. If your capital improved value is $125,000, multiply this by your council rate (which might be 0.004 cents), giving you $500.

Here’s another example of the rates you might be charged. If the assessed annual value of your property is $200,000, and your council rate is 0.0042 cents, the rates you’ll pay will be equal to $840.

Say you’d like to make changes to your property and choose to take out a home loan to do so. What’s important when making changes, which might be a building extension or the demolition of a part of your home, is to take note of the building work required before you begin.

Once you know which building work will be part of your proposal, and have been given the go ahead, you will need to notify the valuer general who will then make another valuation of your property. Once they have been advised of the approved changes, your rates will be updated and you’ll be notified.

What is capital value of a property in Australia: What factors affect it?

Certain calculations that are used to provide the capital value of a property in Australia include factors such as:

  • Improvements to structures, which might include the building’s walls
  • Enhancements to the land, which might include planting trees

For example, you might have enhanced the land of your property by planting a row of trees, or by extending your property’s area by expanding the space and building additional walls. If you’ve spent $20,000 on extending the property space and built additional walls, this is one factor that will contribute to the capital value of your property.

What is capital value of a property and who determines this?

Capital values of properties are established by the valuer general office. The valuer general office will establish the capital value by acknowledging enhancements and improvements mentioned in the section above.

What the valuer general office will also consider are the valuation methods, market evidence, and additional factors that can change or influence a property’s value.

What Is Capital Value Of A Property in Australia Why it’s Vital

What is capital value of a property in Australia VS market value?

The capital value of a property is often different from the market value of a property. Whereas capital value determines an approximate property value guide used to make calculations for the necessary council rate, the market value, the market value are more specific.

The market value is established by a real estate agent by considering three factors. The first is the capital improved value which, as mentioned, is the value of the land and building or land enhancements. 

The second is the net annual value which is the present moment value of the net annual rent of a property. And the third is the land’s value on its own (known as the site value).

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Land value and capital value: Does capital value include land value?

Yes, the capital value does encompass the land value, since the capital value is the sum of the land’s value and the improvements made to the land, in addition to the value of the property itself.

What is capital value of a property in Australia compared with land value?

You’ll get a different answer when comparing the questions “what is capital value of a property in Australia” and “what is land value”. Even though the capital value includes the land value, the land value refers to the property’s value that excludes the visible enhancements and improvements made to the land.

To explain this more explicitly, whereas the capital value equates to a price that your property might sell for when it has been revalued, the land value equates to the land’s price that you would receive when revalued and sold—excluding the buildings or enhancements.

Land value also refers to the property’s value excluding the enhancements of structural changes or changes to fixtures.

What Is Capital Value Of A Property in Australia: Why it’s Vital

What is meant by assessed annual value when asking what is capital value of a property?

The assessed annual value, in relation to the capital value of a property, refers to the property’s annual, gross rental value, whereas the capital value is the property’s total value.

Since the assessed annual value (also known as the AAV) can be used to calculate the property rates you must pay, it’s a very important figure to be aware of.

Capital value of property in Australia: Things to keep in mind

The vital things to keep in mind are that if you’re an Australian expat looking to make enhancements to your home after being approved for a home loan or to get your property valued, look out for that capital value figure. The capital value can change, which is why you should always keep an eye on it!

Go to odinmortgage.com to learn more about home loans and home valuations and stay up to date with the latest on property and mortgages in Australia.

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