Is A Property Valuation Tax Deductible? (Ep14)
A property valuation is usually done by lenders to value a property before purchasing or to refinance your loan some time after purchase. The cost varies depending on your lender and the area so it is important to know if a property valuation is tax deductible or not.
When A Property Is Tax Deductible
A property valuation is deductible if the valuation is for investment purposes. Some of the following situations are likely to be tax deductible
- A valuation to finance and purchase an investment property
- A valuation to refinance an investment property to purchase more investments
- (potentially) a valuation done on your Principle Place of Residence for the purpose of refinancing to purchase an investment property
Disclaimer: As always I am not a financial advisor or tax accountant so always seek professional advice before claiming any tax deductions. This is for educational purposes only.
So, when it is for investment purposes, a property valuation is highly likely to be tax deductible.
I think the easiest way to think about it is to think about your property portfolio as a business. Businesses can claim tax deductions on expenses that help them earn an income. If a property valuation is for your investment portfolio (to help you earn more money) it is likely to be claimable and if it is for you personally (to fund that family vacation or the new BMW then probably not).
When A Property Valuation Isn’t Tax Deductible
A property valuation will not be tax deductible if it is not done for investment purposes. This may include (but is not exclusive to) the following scenarios
- Getting a property valuation to buy your Principle Place of Residence (your home)
- Getting a property valuation done so you can get an equity loan to fund your holiday
- Getting a property valuation done before selling your Principle Place of Residence
Why Get A Valuation Done?
I talked previously about the cost of getting a property valuation done, but I wanted to quickly touch on the benefits of getting a property valuation done.
Getting a valuation on your home or investment property can be extremely valuable for a few reasons
- To allow you to borrow equity from the bank (gained through capital growth)
- To lower your Loan to Value Ratio (LVR) to make you look better to lenders
- To understand your portfolio better and where you currently stand