Property valuation for stamp duty: when you need one

A property valuation for stamp duty is an independent assessment of a property's market value, used by a state revenue office to work out the duty payable when a property changes hands. You need one whenever a transfer is not a normal arm's length sale, such as a gift, a transfer between family or related parties, or a move into a trust or SMSF, because duty is charged on the greater of the purchase price paid or the market value. This guide explains when a stamp duty valuation is required, how the duty is calculated, and who can prepare one. Rules vary by state, so confirm with your state revenue office.

Key takeaways

• Stamp duty is assessed on the greater of the price paid or the property's market value.
• You need a stamp duty valuation when a transfer is not at arm's length, such as a gift or a family transfer.
• Transfers into a trust or superannuation fund, and to related parties, also commonly require a valuation.
• The valuation establishes the dutiable value, so the duty is neither underpaid nor overpaid.
• Terminology and rules vary by state, so always check with your state revenue office.

What is a property valuation for stamp duty?

A stamp duty valuation is an independent, formal valuation of a property's market value, prepared for stamp duty purposes. It gives the state revenue office an objective figure to base the duty on.

The value used is generally the unencumbered market value, meaning the property's worth ignoring any mortgage over it. It reflects what the property would sell for on the open market.

Because it can be tested by the revenue office, a stamp duty valuation report has to be evidence-based, not a rough estimate.

Why stamp duty is charged on market value

When you buy a property at arm's length, the price you pay is treated as its value, and duty is calculated on that contract price. There is no dispute about what it is worth.

The problem arises when a transfer is not at arm's length. If property passed between related parties at a discounted price, duty could be avoided by understating the value, so the revenue office assesses duty on the greater of the consideration paid or the unencumbered market value. A valuation supplies that figure.

When do you need a stamp duty valuation?

You generally need a valuation in certain circumstances where there is no reliable arm's length price. The most common are:

• Family and related party transfers. Transferring ownership to a spouse, child or other related party, where the price may not reflect market value.
• Gifts and nominal consideration. A transfer for no payment, or for nominal or non monetary consideration.
• Transfers into a trust or SMSF. Moving property into a superannuation fund, a trust, or between company and trust entities.
• Below-market sales. Any sale to an associated person at a discounted price rather than open market terms.
• Fractional interest transfers. Transferring a part share of a property between two or more parties.

In each of these, the revenue office wants an independent figure rather than the stated price.

How is stamp duty calculated?

How much duty you pay depends on the dutiable value, the greater of the transfer price and the property's market value. The state then applies its own duty rates to that value to work out the tax payable; the valuation only fixes the value, not the rate.

Because dutiable transactions and rates differ between states, the same transfer can attract different duty depending on where the property is.

How the property is valued

Most stamp duty valuations use the direct comparison method. The valuer analyses comparable sales of similar properties and recent sales evidence to determine the market value at the transfer date.

The report sets out the valuation date, the sales evidence, and the valuation rationale, so the revenue office can follow how the figure was reached.

This approach works for standard residential properties, residential land and most other assets.

Stamp duty valuation vs a real estate agent appraisal

It is tempting to use a free figure from a real estate agent, but revenue offices generally will not accept one. Real estate agents provide an informal appraisal, not a formal valuation.

A stamp duty valuation is independent and evidence-based, prepared to reflect market value and to stand up if the figure is queried. An appraisal carries no such weight.

Who can prepare a stamp duty valuation?

For a report the revenue office will accept, you need a qualified valuer, typically a registered valuer or certified practising valuer who is a member of the Australian Property Institute.

That standing is what makes the stamp duty valuation report reliable. A registered property valuer documents the market value with sales evidence, giving the state a defensible basis for the duty.

Stamp duty or transfer duty? State differences

The name changes across the country. New South Wales and Queensland refer to transfer duty, while other states still call it stamp duty, but the concept is the same.

The thresholds, rates and exact valuation requirements differ by jurisdiction, so it is important to check the rules with your own state revenue office before you transfer.

How Valato helps

Valato provides independent stamp duty valuation reports across Australia. Each establishes the unencumbered value with comparable sales evidence, ready to give your revenue office.

Whether it is a family transfer, a gift, or a move into a trust or SMSF, you get a defensible figure for the duty. Compare the valuation options or order a valuation, and confirm the treatment with your conveyancer.

The bottom line

A stamp duty valuation establishes the market value a state revenue office uses to assess duty on a transfer. You need one whenever the deal is not at arm's length, such as a gift, a family transfer, or a move into a trust or SMSF. Get an independent, evidence-based valuation, check the rules for your state, and the duty is worked out correctly.

Frequently asked questions

General information only: This article is general in nature and does not take into account your individual circumstances. It should not be relied on as tax, financial or legal advice. Stamp and transfer duty are state-based and the rules vary; confirm the current requirements with your state revenue office or a qualified professional before transferring property.