I'm a new investor.
Trying to buy a property in outer suburb of Adelaide for $350K. The selling agent telling me that this property has the Capital value of $325K which is assigned by the council…..and he says it a very good bargain as finding a property of so close Sale value and Capital value is rare. According to him, generally the sale value is approx 25% higher than the Capital value. Can somebody pls help me with this?
Hi, generally council valuation is lower than sale price. Nowadays council has increased valuations significantly.
I once owned a house that council valued at $260000, the bank valued it $330000 and I sold it for $395000.
$350000 is a fairly high price for outer Adelaide suburb, should be new, 4BR
KY
Councils do their valuations every two years where as the sale price is the price the current market will pay for the property so it is a more current valuation.
Thanks for the replies. But, I wanted to know whether this term 'capital value' is real and significant in decision making or not.If you are buying a property, do you care what is the capital value or you only care about other points?
Hey Sanjay,
IMHO Capital value is worthless, unless you can use the equity to re-draw or resell the property for that capital value…..
Im pretty sure(depending on the local council) you pay more in rates for an increased capital value. Not 100% on that though.
Capital value is probably only valuable to a real estate agent trying to sell a property…..
Good luck
Thanks Patriotsoldier.
I also think the same.From SA Valuation of Land Act 1971
Capital Value of land means the capital amount that an unencumbered estate of fee simple in the land might reasonably be expected to realise upon sale, but if the value of the land has been enhanced by trees planted on the land (other than commercial plantations), or trees preserved on the land for the purpose of shelter or ornament, the capital value must be determined as if the value of the land had not been so enhanced;<font size=”3″>
How is it used?
</font>5 Interpretation<p style=”margin: 6pt 0cm 0.0001pt 39.7pt;text-indent: -39.7pt;line-height: normal” class=”MsoNormal”>
(1) In this Act, unless the contrary intention appears—
<p style=”margin: 6pt 0cm 0.0001pt 39.7pt;line-height: normal” class=”MsoNormal”><span>annual value of land, means a value computed as three-quarters of the gross annual rental that the land might reasonably be expected to realise if leased upon condition that the landlord were liable for all rates, taxes and other imposts on the land and the insurance and other outgoings necessary to maintain the value of the land, or as five per cent of the capital value of the land, but this definition is subject to the following qualifications—
<p style=”margin: 6pt 0cm 0.0001pt 79.4pt;text-indent: -39.7pt;line-height: normal” class=”MsoNormal”>(a) the annual value of land held of the Crown by virtue solely of a mining lease must not exceed the amount of the rental payable to the Crown under the lease, and if the annual value of any such land would, but for this paragraph, exceed that amount, the annual value must be reduced to that amount; and
<p style=”margin: 6pt 0cm 0.0001pt 79.4pt;text-indent: -39.7pt;line-height: normal” class=”MsoNormal”>(b) if the value of the land has been enhanced by trees planted on the land (other than commercial plantations), or trees preserved on the land for the purpose of shelter or ornament, the annual value must be determined as if the value of the land had not been so enhanced; and
<p style=”margin: 6pt 0cm 0.0001pt 79.4pt;text-indent: -39.7pt;line-height: normal” class=”MsoNormal”>(c) if the value of the land is enhanced by the existence on the land of any fixtures, consisting of prescribed machinery, plant or equipment the annual value of the land must (where the annual value is computed on the basis of gross annual rental, but not otherwise) be reduced by an amount representing depreciation on that machinery, plant or equipment; and<!–[if gte mso 9]> Normal 0 false false false EN-AU X-NONE X-NONE MicrosoftInternetExplorer4 <![endif]–><!–[if gte mso 9]> <![endif]–>
<p style=”margin: 6pt 0cm 0.0001pt 39.7pt;line-height: normal” class=”MsoNormal”>(d) where it is not reasonably practicable to determine a gross annual rental in relation to land, the annual value of the land must be computed on the basis of the capital value of the land;
<p style=”margin: 6pt 0cm 0.0001pt 39.7pt;line-height: normal” class=”MsoNormal”>site value of land means the capital amount that an unencumbered estate in fee simple in the land might reasonably be expected to realise upon sale assuming that any improvements on the land, the benefit of which is unexhausted at the time of valuation, had not been made; for the purposes of this definition—
<p style=”margin: 6pt 0cm 0.0001pt 79.4pt;text-indent: -39.7pt;line-height: normal” class=”MsoNormal”>(a) improvements means—
<p style=”margin: 6pt 0cm 0.0001pt 119.1pt;text-indent: -39.7pt;line-height: normal” class=”MsoNormal”>(i) buildings and structures (but not including structures in the nature of site works); and
<p style=”margin: 6pt 0cm 0.0001pt 119.1pt;text-indent: -39.7pt;line-height: normal” class=”MsoNormal”>(ii) wells, dams and reservoirs; and
<p style=”margin: 6pt 0cm 0.0001pt 119.1pt;text-indent: -39.7pt;line-height: normal” class=”MsoNormal”>(iii) the planting of trees for commercial purposes;
<p style=”margin: 6pt 0cm 0.0001pt 39.7pt;line-height: normal” class=”MsoNormal”>unimproved value of land means the capital amount that an unencumbered estate of fee simple in the land might reasonably be expected to realise upon sale assuming that any improvements on the land (except, in the case of land not used for primary production, any site improvements), the benefit of which is unexhausted at the time of valuation, had not been made; for the purposes of this definition—
<p style=”margin: 6pt 0cm 0.0001pt 79.4pt;text-indent: -39.7pt;line-height: normal” class=”MsoNormal”>(a) improvements means houses and buildings, fixtures and other building improvements of any kind whatsoever, fences, bridges, roads, tanks, wells, dams, fruit trees, bushes, shrubs and other plants planted or sown, whether for trade or other purposes, draining of land, ringbarking, clearing of timber or scrub and any other actual improvements;
<p style=”margin: 6pt 0cm 0.0001pt 79.4pt;text-indent: -39.7pt;line-height: normal” class=”MsoNormal”>(b) site improvements means reclamation of land by draining or filling, and any retaining walls or other structures or works ancillary to that reclamation, the excavation, grading or levelling of land, the removal of rocks, stone, sand or soil, and the clearing of timber, scrub or other vegetation;
<p style=”margin: 6pt 0cm 0.0001pt 39.7pt;line-height: normal” class=”MsoNormal”>value in relation to land means the annual value, the capital value, the site value and the unimproved value of the land or any one or more of those values; to value means to determine or assess those values or any one or more of them; and determination of value or valuation means a determination or assessment of those values or any one or more of them.
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