Category Archives: Valuation
Determine the market value of the property
Any house, apartment or lodge which is habitable and which could be sold separately will be subject to the tax.
The market value of the property must be determined as of 1st May 2013 and will form the basis of the annual charge for 2013, 2014, 2015 and 2016. Any home improvement changes or increases in property prices during this period will not affect the property tax liability.
Valuing urban homes in estates in cities should be relatively straightforward using online resources
Valuing farm houses, one off houses in rural areas and large country houses will present more of a challenge. If two individual units are tied by a planning consent which intrinsically links the two, then in this instance they would count as one dwelling. On the other hand, a main residence with separate ‘granny flat’ may require a return for two residential units. The same would apply to a period house with a staff lodge and gate lodge.
How to Value your Property
The valuation of residential properties is generally done through direct comparison, i.e. if an identical house on the same road recently sold for €300,000 then the value of the house being valued will most likely be €300,000.
All house price sales from 2010 are listed on www.propertypriceregister.ie Other resources included the property portals such as www.myhome.ie and www.daft.ie. These websites are useful because the information from the property price register is placed on maps, making it easy to identify where the most recent homes have sold relative to the home being valued.
Analysing Comparable Information
Unfortunately, it is very unlikely that an identical home will have been recently sold and some analysis with adjustments to reflect the differences in size, location, condition and date of sale will be required.
There is no strict rule on how to draw comparison from nearby sales but adjustments to the values achieved are generally required to reflect the following;
- Service charge
- Garden aspect
The above is not an exhaustive list and the individual points can have more or less impact depending on the type and location of the property being valued. More weighting should be applied to the most recent sales evidence of similar type properties with close proximity to the property being valued.
If it becomes apparent that professional advice is required, it is worth noting that the responsibility still rests with the owner to have a correct valuation. If the valuation advice provided is incorrect then it is the owner who is liable for fines / penalties.
Landlords should be aware that the Local Property Tax is not currently deductible for tax relief
Ensure your property value is in the correct band
There are 20 valuation bands starting from €0-€100,000 and ending up at values greater than €1m.
In determining the amount to pay, Revenue has a calculator available on its website www.revenue.ie
For valuations over €1m, a precise valuation is required by the Revenue Commissioners in order to accurately calculate the Local Property Tax due.
Filing Local Property Tax Returns
Payments can be made by bank transfer, or by monthly direct debit, or be made online for which there is an extended deadline of May 28th
Another option is to have the tax deducted as source by your employer.
After years of calling for property price clarity and lagging our UK neighbours by some distance we overcame data protection sensitivities and began publishing residential property sale prices in September 2012. The register was poorly formatted, lacking in depth and detail and littered with mistakes. Nonetheless transactional information in a dysfunctional market was broadly welcomed.
The Residential Property Price Register is produced by the Property Services Regulatory Authority (PSRA) pursuant to section 86 of the Property Services (Regulation) Act 2011. It includes Date of Sale, Price and Address of all residential properties purchased in Ireland since the 1st January 2010, as declared to the Revenue Commissioners for stamp duty purposes
It is important to note that the Register is not intended as a “Property Price Index”.
In a small number of transactions included in the Register the price shown does not represent the full market price of the property concerned for a variety of reasons. All such properties are marked **.
If the property is a new property, the price shown is exclusive of VAT at 13.5%.
The PSRA disclaims the property price data by saying…
“The information in the Register is that which is filed for stamp duty purposes with the Revenue Commissioners by those doing the conveyancing of the property. At present nearly 100% of the data is filed on-line directly by the purchaser’s solicitor. Any errors in the data are errors made by those filing the data. The PSRA does not in any way edit the data. It simply publishes, in a fully transparent manner, that which is filed.”
The Authority acknowledges that there are errors in the data. Where errors are discovered or reported to the Authority they will be taken up with the Revenue Commissioners.
RICS Valuation – Professional Standards (the ‘Red Book’) contains mandatory rules, best practice guidance and related commentary for all members undertaking asset valuations. The Red Book publication details mandatory practices for RICS members undertaking valuation services. All those who occupy, own, develop or trade tangible and intangible assets in today’s global markets rely on competent and impartial valuers.
Valuation matters to us all. Valuations underpin nearly all financial decisions from home mortgages to major investment and corporate finance transactions or stock exchange listings. Valuers play an important role in the move to converge the world’s accounting standards under International Financial Reporting Standards (IFRS).
To what types of valuation do RICS Valuation Standards apply?
As a general guide, the following property types currently fall within the scope of the RICS Red Book:
o Land and buildings (commercial property, residential property, agricultural property)
o Businesses and intangible asset
o Plant and equipment
o Personal property
o Mineral assets
In broad terms the Red Book applies to the following valuation purposes:
o Loan security
o Financial reporting (including valuations for investment funds and
o Investment portfolio performance
o Takeovers and mergers
o Stock exchange (eg IPOs)
o Purchase reports (other than pricing advice provided in the course of
agency which is exempt under PS 1.2)
o Taxation (other than valuations which are subject to separate statutory
Unless produced for reliance by third parties, rent review/lease renewals are generally considered to be advice provided in the course of negotiations and are exempt under VS1.1
Insurance valuation services are usually required to establish the amount of insurance required for the purposes of establishing cover or determine the sum to be paid following loss or damage as a result of an insured peril.
Often there can be confusion between the market value of a building and the reinstatement value following a catastrophic loss. On one hand, the value of the site cannot be discounted as it still exists in most cases but in addition the site must be cleared, waste removed, architects and engineers engaged, local authority permission sought, fire certificates granted etc. and all this takes time.
In the past few years in Ireland, we have a seen huge changes in values attributed to property. Many owners, managers and landlords are reviewing their insurance premiums to make savings where it can be demonstrated that their buildings may now be overvalued for insurance purposes. Most policies provided for an annual increase in line with inflation, which had rocketed during an era of rapid capital growth and low interest rates.
When carrying out an insurance valuation, we first measure the building, using Net Internal Area (NIA) when measuring office or retail property. This is the useable area within a building measured to the internal face of the perimeter walls at each floor level. Gross Internal Area (GIA) is the area measured to the internal face of the perimeter walls at each floor level. There is an extensive range of inclusions and exclusions that also need to be taken into account during the measuring process that address the specific areas of a building. Gross External Area (GEA) is generally used for building cost estimation and is the preferred method of measurement for calculating building costs of residential property for insurance purposes. Party walls in shared ownership should be measured to their party line.
Most cost price indices do not include a provision for wardrobes, carpets fixtures and fittings, which are normally covered under a separate contents cover.
We use a range of up to date published indices such as building costs guides, construction purchasing & orders indexes to accurately assess price movements and costs associated with construction. More recently, the cost of fuel and VAT increases have demonstrated some cost inflation acceleration within an environment of minimal new construction starts and civil engineering project declines.
Even though the cost of construction is at historic lows even a small pick up in general economic activity would reflect in increased build costs. This is important factor to acknowledge in pricing as the lead-time from property loss to reconstruction can be 12 to 18 months in some cases and the loss may occur in the eleventh month of the policy so you may need to plan for a claim cost in 24 to 30 months.
If we can be of assistance when assessing your insurance cover please contact us at email@example.com or call us on 01 6767177.
Here we look at some key definitions and different types of value. This is by no means exhaustive but it can give you an idea of where value is more than a straight forward calculation or method.
The estimated amount for which an asset or liability should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.(IVS)
The estimated amount for which a property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.
An additional element of value created by the combination of two or more interests where the value of the combined interest is worth more than the sum of the original interests.
An amount that reflects particular attributes of an asset that are only of value to a special purchaser.
The value of an asset that has reached the end of its economic life for the purpose it was made. The asset may still have value for an alternative use or for recycling
The estimated value of an investment property at the end of a period during which the rental income is either above or below the market rent.
1. The anticipated value of an asset at the expiration of its useful life.
See also: Salvage Value
2. IFRS definition (IAS16): “The estimated amount that an entity would currently obtain from disposal of an asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.”
The application of the IFRS definition is described in IVS 300 Valuations for Financial Reporting.
The value, as of a specified date, of a future payment or series of future payments discounted to the specified date (or to time period zero) at an appropriate discount rate.
Net Present Value
The value, as of a specified date, of future cash inflows less all cash outflows (including the cost of investment) calculated using an appropriate discount rate.
Net Book Value
In relation to a business enterprise: The difference between total assets (net of accumulated depreciation, depletion, and amortization) and total liabilities as they appear on the balance sheet.
In relation to a specific asset: The capitalized cost less accumulated amortization or depreciation as it appears on the books of account of the business enterprise.
The net amount that would be realized if a business is discontinued and its assets are sold individually. The appropriate bases of value and any appropriate additional qualifying assumptions should also be stated.
The value of an asset to the owner or a prospective owner for individual investment or operational objectives.
A valuation approach that provides an indication of value by converting future cash flows to a single current capital value.
The initial income from an investment divided by the price paid for the investment expressed as a percentage.
See also: All Risks Yield; Reversionary Yield; Yield; Yield to Maturity
A non-monetary asset that manifests itself by its economic properties. It does not have physical substance but grants rights and economic benefits to its owner.
Internal Rate of Return
The discount rate at which the present value of the future cash flows of the investment equals the acquisition cost of the investment.
A valuer who is not employed by the owner or manager of an asset.
The value of a business to all of its shareholders
The total value of the equity in a business plus the value of its debt or debt-related liabilities, minus any cash or cash equivalents available to meet those liabilities.
Discounted Cash Flow Method
A method within the income approach in which a discount rate is applied to future expected income streams to estimate the present value
Basis of Value
A statement of the fundamental measurement assumptions of a valuation.