Capital Gains

[pi2012]

Hello all,
I've got a question regarding Capital Gains.
3 months ago, we bought a house in Ivanhoe for $595,000.
Really old house, need a major reno but we bought it so as to develop in the future. Land 640sqm

Last weekend, a house next door in a very similar condition was sold for $595,500 at an Auction. Land 574 sqm.
How would i compare our property to this property as far as CG goes.
I am just doing a rough calculations here:
Land Value = 595500/574 = 1037 per sqm and if i multiply this with our block of 640sqm,
Our Land Value = 663972 which gives me a CG of (663972 - 595000) = $68972
Is this right or i am just getting too excited hehe

 

[yo yo ma]

You're probably just getting excited
One house is not the same as another... When you buy 2 CBA shares, they are exactly the same & both worth the same amount. Comparing properties is much more difficult, as although it looks good with the land size, you have to compare all the features- bedrooms, bathrooms, the condition of the place etc.

If the place next door is a simlar style & condition your your place, then yes, it looks good for you. However, a property is only worth what the market is prepared to pay.
Steve

 

[skater]

Well I don't know Ivanhoe at all, but to try to work out your CG based on a slightly smaller block selling for the same price as yours is, IMHO, getting excited over what could turn out as nothing. Sorry.

 

[kaf]

Nothing wrong with getting excited!! However I'm not sure how a valuer would deal with this. My guess would be to value both properties very similarly unless your increased land size would put you over the threshold for multiple dwelling development or subdivision. Otherwise I think the location of the block is significant (ie. one on a busy street while the other is a cul-de-sac) or the state of the property but I think this relatively small difference in land size won't make much difference. But then I'm not a valuer and love to hear what others think.

Cheers

kaf

 

[stumunro]

i had a valuer the other day tell me my 2 duplex's on one title on 1800sqm of land, was not of any more value than a normal size block in the area... i hate banks, especially when you get a valuer with no idea.

 

[skater]

i had a valuer the other day tell me my 2 duplex's on one title on 1800sqm of land, was not of any more value than a normal size block in the area... i hate banks, especially when you get a valuer with no idea.

I had one of those, but after I followed him up & challenged, he changed his mind.

 

[stumunro]

I had one of those, but after I followed him up & challenged, he changed his mind.

exactly what happened in my situation, in credit to him he copped it sweet and re-valued it to something more suitable, but it's a bit silly how often I hear people having to do this.

 

[skater]

exactly what happened in my situation, in credit to him he copped it sweet and re-valued it to something more suitable, but it's a bit silly how often I hear people having to do this.

Mine didn't exactly cop it sweet. He was from the North Shore & came & looked at the properties (Western Sydney), while looking down his nose at both me & the houses. I had to ring around the all the local R/E to get evidence of other dual occ properties that had sold in the last few months & since they are few & far between, it was a difficult task. Even then, he argued that it wasn't worth much. He tried to tell me that the second dwelling was obviously NOT council approved because if it was, then the property would have been sub-divided. WTF!!!

I eventually got my way, but it was hard going.

 

[stumunro]

He tried to tell me that the second dwelling was obviously NOT council approved because if it was, then the property would have been sub-divided. WTF!!!

I eventually got my way, but it was hard going.

I can imagine exactly how he might have acted towards you, doesn't it make your blood boil! Lol a big WTF indeed! At least we can look back and laugh, personally I think people like this should not be in a job. I'm glad it worked out in the end for you, but i feel sorry for people who don't speak up in these situations, or aren't as knowledgable and take what the valuers say as 100%.

 

[skater]

At least we can look back and laugh, personally I think people like this should not be in a job.

Not in the job they are doing, at least.

And yes, I can laugh about it now, although at the time the last thing I felt like doing was laugh. It happened 2-3 years ago

 

[Ajax]

I have an issue with valuers that goes the other way. I have one of the smaller blocks in Gunn, NT (316m2) when others are 375m2 up to 480 m2. The houses like mine (cottage style) are almost identical...3 bedroom one bathroom, carport often built to the same floorplan..

Every time I provided sales details of a comparable house (to revalue property) the valuer lops off a substantial % due to my block size. I 've learnt to not buy the smallest lot size of land in a new suburb even if the improvements are the same as on other lots nearby.

Even where the lot sizes have been the same and the comparable house the same the valuer will inform me that the other property has a plunge pool which justifies the substantially higher value over mine.

Seems like the valuer wants to value my property at 10%-15% below market at all times.


Ajax

 

[pi2012]

Appreciate all the replies...but still confused how would you justify the Capital Gains on two similar properties..one with more land than the other?

 

[marg4000]

Until an actual sale takes place all values are theoretical. A property is only worth what someone is prepared to pay for it.

You bought your property 3 months ago for $595K - next door sold recently for the same price.

That means both properties are worth the same amount.

Even if the two houses were identical, the emotions of the purchasers at the time plays a part in how much each is prepared to pay. Even if next door had sold for $650K that does not mean that someone would pay the same for yours. They may pay more, they may pay less.

Your land is bigger - for some people that is a plus, for others a minus.

Unless the extra land means that you can use the land for a more valuable purpose then it remains just that - extra land. Great for people with kids or a dog, not so great for a single or couple not interested in gardening.

Your other option is to pay for a valuer - but then again, you may not agree with his/her value.
Marg

 

[pi2012]

Thanks marg4000.
Really liked the way you have answered my question. Thanks again