Commercial Valuations and Capital Gains Tax in Family Law

While residential assets have historically dominated family law settlements, there’s been a noticable increase in requests for commercial valuations within this realm. Understanding the disparity between residential and commercial valuations in family law is essential.

Exploring the Differences - Residential v’s Commercial Valuations in Family Law

In residential property assessments, our primary methodology typically revolves around direct comparison. This method involves analysing recent property sales in the vicinity to draw parallels with the subject property. Factors such as size, condition, location, amenities, and property features are among the multitude of attributes considered.

Conversely, commercial valuation places significant emphasis on additional factors such as rental income potential, occupancy rates, lease terms, quality of lease covenants, operating expenses, market demands, and industry-specific characteristics.

Capital Gains Tax Implications During Tax Season

As tax season approaches, clients going through family law matters are inevitably mindful of capital gains tax implications as their assets are divided or transferred. Capital gains tax becomes a focal point in family law settlements involving commercial valuations for several reasons:

Asset Transfer: Transferring an asset like a business or commercial property as part of a divorce settlement may trigger capital gains tax. This tax is typically assessed based on the discrepancy between the asset's original purchase price (or adjusted basis) and its current fair market value at the time of transfer.

Valuation Impact: The valuation of the commercial asset significantly influences the capital gains tax liability. Appreciation in the asset's value since its acquisition can lead to a larger capital gain and consequently a higher tax liability for the transferring party.

Tax Basis Adjustment: In numerous jurisdictions, the tax basis of the asset for the receiving party is adjusted to its fair market value at the time of transfer. This reset in the receiving party’s tax basis may potentially mitigate future capital gains tax liability upon the eventual sale of the asset.

Seeking professional guidance is imperative due to the intricate nature of tax laws and regulations. Acumentis specialises in providing professional capital gains tax valuation services to aid both parties in navigating family law settlements effectively.

Expanding Services - we now, offer Business Valuations

Recognising the growing demand for commercial property valuations, Acumentis now offers nationwide business valuations.

Whether associated with the commercial property being valued, or as a separate business valuation request, our commitment to business valuations extends across various industries, including real estate, retail, leisure, automotive, healthcare, childcare, industrial, and professional services, among others.

Mark Robins
State Director SA
— Adelaide Property Valuers
  |  LinkedIn
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