Desktop estimate vs full valuation.

Side by side

What an AVM actually is

An automated valuation model is a statistical estimate produced from sales records, property attributes and a model of the local market. It is genuinely useful for portfolio monitoring and for deciding whether a valuation is worth commissioning. It is not an opinion held by anybody, it carries no certification and no professional indemnity cover, and nobody can be asked to explain how this property differs from the comparables. That is the whole reason it fails as substantiation: the ATO’s expectation is that a person with relevant qualifications, experience and knowledge formed the view.

When a desktop assessment is and is not enough

A desktop assessment is a real valuer working from title records, planning data, historical sales and photographs, without attending. For a low-value, homogeneous property in a deep market — a standard unit in a large complex where twenty near-identical sales exist — it can be defensible, and it is cheaper and faster. It becomes indefensible the moment condition matters: a renovation, a defect, a partial demolition, an unusual layout, anything the records do not describe. Since condition is exactly what a retrospective valuation is usually trying to establish, desktop work is a poor fit for the most common CGT scenario.

Where kerbside sits

A kerbside assessment is an inspection from the street: the valuer attends, sees the streetscape, the facade, the roofline and the surrounding stock, but does not go inside. It is the right answer more often than people expect — a tenanted property where access is refused, a hostile family law matter, a deceased estate where the keys are lost, or a retrospective date where the current interior is irrelevant because the property has since been renovated. It must be disclosed as a kerbside assessment with the assumption stated, and your accountant should confirm the provision being relied on tolerates it.

What can go wrong

Two failures recur. The first is an AVM figure entered on a return because it was free and instant, then queried years later when the paperwork is asked for and there is none. The second is a desktop assessment commissioned for a renovated property, where the report values a dwelling that no longer resembles the one on the records. Both are recoverable — a valuation can be prepared later — but the later report has to reconstruct the property at a date now further in the past, which costs more than the original inspection would have.

Questions we are asked about this

Sources

• Market valuation for tax purposes — Australian Taxation Office
• Income Tax Assessment Act 1997 — Consolidated Act, AustLII
• Australian Property Institute — Professional Practice Standards and the CPV designation

General information about how valuations are used for tax purposes. Not tax advice and not legal advice. Your accountant, tax agent or solicitor should confirm which provision applies to your circumstances.

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