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It is quite common for property investors to confuse the services offered by a valuer and a quantity surveyor.
Valuers specialise in property economics, specifically, establishing market values. Valuers usually have an area of expertise, such as the prevailing or forecast value of residential, commercial or industrial property. Licensed valuers conduct large amounts of work on behalf of financiers to determine the value of a property for finance calculations. A market valuation is also used in the calculation of capital gains tax. A valuer determines the perceived “market value” (potential sales price), and is a somewhat subjective result.
In contrast, a quantity surveyor is more scientific and determines the actual construction cost of a development. A quantity surveyor’s costing assists in determining whether a development will allow for the required return for a developer, through a combination of input costs: land value, construction cost, sale value and profit.
Quantity surveyors also provide various property services throughout all stages of a building’s lifecycle. With regard to property, one of the key services offered is tax depreciation reporting on investment properties. This is where the majority of confusion regarding the two professions presents itself. Industry professionals may advise an investor that they require “a valuation for taxation purposes”, correctly known as a tax depreciation and capital allowance schedule.
With regards to property tax depreciation, The Australian Taxation Office states the following in TR 97/25:
• “Unless they are otherwise qualified, valuers, real estate agents, accountants and solicitors generally have neither the relevant qualifications nor
experience to make such an estimate”.
Furthermore, The Australian Taxation Office states that:
•“Appropriately qualified people might include a quantity surveyor, who has expertise in the relevant type of construction” (taken from TR 97/25A).
It is clear that many property owners and investors require the services of a valuer, to determine the “market value” of a development. However, with regards to determining the construction cost of a development, or the tax depreciation potential of a property, property owners should employ the services of a quantity surveyor.
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