bright line test<\/a>, for example, were “not relevant as that test does not use a Valuation Day”.<\/p>\nWhat would the options be?<\/p>\n
The TWG report discussed some options for valuation, but did not make clear which should be selected.<\/p>\n
For instance, Rateable Value or RV – which gets updated once every three years and is used to calculate council rates bills – was “easily obtainable, but may be inaccurate depending on when it was last updated”.<\/p>\n
The other option discussed in relation to land property was a comparison with similar properties in the area which “could be done on a case-by-case basis or using an algorithm already commonly available”.<\/p>\n
This would make use of the kinds of data produced by companies like Cotality or QV using an “Automated Valuation Model” or AVM.<\/p>\n
Cotality’s chief property economist Kelvin Davidson told RNZ their method produced computer-based valuations for banks for lending purposes and was able to value every property in the country roughly every week or so.<\/p>\n
“The AVMS or the computer-based valuations look at comparable sales for the similar properties in the area – factors in what they might have sold for, looks at bedroom count, land size, all of these different variables – to try and come up with a really fact based estimate of what the value would be on any given date.<\/p>\n
“There’s a lot of back testing done to verify that and also close to what a physical valuer would do.”<\/p>\n
Davidson said physical inspection of the property – which was not discussed in the TWG paper – was the “gold standard” of valuations, but it was “certainly not going to be practical to have a valuer visiting every single property that could be relevant”.<\/p>\n
The “tidiest” solution – and certainly cheaper than a physical inspection – would be to get an AVM valuation for everything on the day, he said.<\/p>\n
“But of course, that could be a mass valuation exercise which will come with extra cost and there’s a question here about who the cost falls on for these valuations: does it fall on the government of the day to pay that, does it fall on the individual property owners?”<\/p>\n
He said alternatively the five-year grace period could work if that cost was expected to fall on property owners, who would be incentivised to try to get their valuations as high as possible.<\/p>\n
“You reduce the amount of capital gains that could be subject to tax, so yes depending on what the valuations are as of 1 July 2027 there may well be some objections.”<\/p>\n
The TWG report also looked into what happens if the owner doesn’t get a valuation within the five-year period, recommending a “default” valuation method be used in that case.<\/p>\n
It set out a rather blunt “straight line” method as one possibility: looking at the price the last time the property was sold and drawing a straight line to the price at sale – and seeing what the price would have been on the 1 July date.<\/p>\n
That approach could, however, produce wildly different values to the other valuation methods – and it remains unclear whether owners would have a choice about which method is used at that point.<\/p>\n
Taxpayers may not know what solutions to all these questions they might be voting on until after the fact.<\/p>\n
Sign up for Ng\u0101 Pitopito K\u014drero<\/a>, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.<\/p>\n","protected":false},"excerpt":{"rendered":"The family home, farms, and other assets will be exempt from Labour’s recently announced CGT policy. Photo: RNZ…\n","protected":false},"author":2,"featured_media":114558,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[48,47,42,43,49,46,44,45,40,38,41,39],"class_list":{"0":"post-114557","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-headlines","8":"tag-audio","9":"tag-current-affairs","10":"tag-headlines","11":"tag-news","12":"tag-podcasts","13":"tag-public-radio","14":"tag-radio-new-zealand","15":"tag-rnz","16":"tag-top-news","17":"tag-top-stories","18":"tag-topnews","19":"tag-topstories"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/114557","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=114557"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/114557\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/114558"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=114557"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=114557"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=114557"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}