This question has become a critical one for many owners with the latest Land Tax bills having arrived over the last couple of months. Also, foreign owners have been slugged with dramatically increased rates of tax irrespective of the value of their investment property (an extra 1.5% of the land value on top of what everyone else pays).
For the most part, council valuations are reasonably accurate but there is a big if. Firstly, in Victoria, your property is not actually physically inspected. All the known facts about your property, such as land size, improvements, number of bedrooms, building size, recent sales etc are fed into a computer and hey, presto. Out spits the value of your property. It’s actually fairly sophisticated but is also open to significant error. The actual condition of your property is not known to the council unless there have been recent renovations or a sale. Absolutely nothing beats an actual inspection of your property. Anything less introduces potential mistakes.
The really big IF though, is whether the valuation is current. For instance the current round of council and land tax notices are based on valuations from 1st January, 2018. Land tax is based on the most recent council valuation of your land (without any improvements). So current notices are taxing you based on the values prior to the fairly steep falls experienced in Melbourne over the last 18 odd months.
In trying to determine current values, do not rely on online estimate sites. They are deeply flawed and, in most instances currently, they provide estimates above actual value. If you doubt the accuracy of your latest government notice, the best way to challenge it is to employ the services of a valuer. As this will incur costs, you will want to be fairly sure it’s worth it. Whilst you can seek the advice of a real estate agent, anything they say will be of interest and use but not sufficient to seriously challenge a council valuation. For that matter, you can provide sales evidence of comparable properties to the council valuer yourself without incurring any cost whatsoever; but remember that the time of the sale is critical.
Mistakes are made, so by all means check whether the amount seems realistic (check this with your local agent). One final note; when the next round of valuation become due on 1st January 2020, don’t expect your rates to come down. If the general values were to drop, say, 25%, the rate in the dollar will simply be raised by the equivalent amount to ensure the taxes raised are still to the government’s requirements.