Amidst the emotionally charged atmosphere of separations, determining the value of shared property assets becomes even more intricate and can often come under meticulous scrutiny.
Within this year alone, we’ve seen an increase in instructions for retrospective property valuations, which can add another layer of complexity to an already intricate process. These retrospective dates can go back as far as 20 to 30 years, and sometimes even earlier.
Retrospective property valuations involve assessing the value of assets in the past, often at a significant point in time within the beginning of a relationship, rather than in the present. With the value of residential real estate increasing so significantly over the last few years, it has become an important piece in the Family Law Process.
While this approach aims to provide a more equitable distribution of assets, it introduces significant challenges. Unlike real-time valuations, retrospective valuations rely heavily on the valuer having access to historical data, relevant sales information, and market data to allow for the provision of the market value of a property for the date specified. It is also imperative that the valuation firm has more experienced, senior valuers who can provide some context around what property values were like some 30 years ago as they were in the industry at the time.
One of the primary motivations behind the surge in retrospective valuations is the need to address capital gains tax obligations arising from the division of assets. With the Australian Taxation Office closely monitoring capital gains tax liabilities, separating couples are increasingly turning to retrospective valuations to accurately assess and allocate tax liabilities.
Addressing the complexities surrounding retrospective property valuations requires a delicate balance between efficiency and fairness, and significant knowledge and effort by the valuer.
We are also mindful of the importance of getting an agreed Statement of Facts at the time of instruction, which provides a detailed description of what the property was like at the that historical point in time so the valuer has an accurate base to work from. This can often be a point of contention between the parties and can hold up the valuation process, so it’s best to get this agreed upon early in the process.
The landscape of property valuations within Australian family law is undeniably intricate, especially considering the increasing reliance on retrospective valuations. It is essential to continue addressing these complexities with diligence and care, ensuring that the pursuit of equitable outcomes remains at the forefront of our efforts.