The emotional security of owning a home is priceless – but sometimes, you need to put a solid number on its value.
Those moments are when you need a property appraisal, as an independent assessment of a property’s worth.
Professional appraisals are an important part of buying or selling a house, as they can help determine how much you can borrow or what is a realistic asking price for your property.
There are also other reasons they could come in handy.
Refinancing and equity loans
Refinancing is the process of paying out your current home loan by taking out a new loan with either your current lender or a different lender.
You are replacing your old mortgage with a new one and your home’s value may have changed since you bought it. Lenders will require an appraisal to confirm that the new mortgage amount is justified by the property’s current worth.
If the home’s value has increased since it was bought, you may be able to tap into the equity you’ve built. If it has dropped in value, it may be hard to secure a new loan.
An appraisal may also help homeowners or investors secure home equity loans, which are second loans on top of an existing mortgage.
The amount you can borrow for a home equity loan mainly centres on the amount of equity you have after the remaining mortgage value is subtracted from the house’s current value. If your home’s worth has decreased, you may not be eligible.
Tax assessment purposes and benefits
The value of a property and the land it resides on is used to establish how much tax will be paid on a property. A high assessed value means the homeowner is likely to pay more in tax.
In Victoria, a property owner’s principal place of residence is generally exempt, however, all other property owned is subject to Capital Gains Tax and Land Tax.
A property appraisal or valuation can help owners validate their objection to an excessive site valuation after receiving their land tax assessment notice.
Capital Gains Tax must be reported on an income return and tax paid on any gains once you sell, being the difference between the purchase and sale price.
A capital gains property valuation report is used to calculate the taxable gain or loss in a property’s value.
Estate planning
A detailed understanding of a property’s value is vital to ensure assets are distributed as set out in the will.
If a property is to be sold, the final sale price determines how much money flows into the total estate value. If a beneficiary is to receive the property, its valuation is also important to other beneficiaries to ensure the estate is distributed fairly.
While there are some crucial reasons to have a property appraised, homeowners simply curious about a property’s worth can also obtain one.
If you would like to organise a comprehensive and trusted property appraisal, contact the experts at Noel Jones.
