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Difference between improved capital value and site value of a property.

Improved Capital Value vs Site Value – What’s the Difference?

When reviewing your property valuation for tax purposes, you may come across two common terms – improved capital value and site value. What do they mean and how do they impact your property taxes?

Improved Capital Value

The improved capital value (ICV) refers to the total market value of a property in its current form. It considers:

  • The underlying land value.
  • Any structures like houses, sheds etc. on the land.
  • Additions and enhancements like swimming pools, landscaping, fencing etc. that improve the property’s overall capital value.

So ICV represents the property’s full value inclusive of the site and any improvements made to it.

Site Value

Site value (SV) refers only to the value of the land itself, without factoring structures or improvements on it.

It assesses the value of the raw land if it was vacant, based on factors like:

  • Land size and dimensions.
  • Location and accessibility.
  • Zoning regulations for the area.
  • Development potential for that site.

Site value forms the basis for calculation of land tax, as it represents the unimproved land value.

The Difference

The key difference lies in what’s included in the valuation:

  • Improved capital value is the property’s total market value in current state, including land plus buildings and improvements.
  • Site value is the value of just the land itself without any structures or enhancements on it.

When Each Value Applies

Improved capital value is used for:

  • Estimating full market value for property sales.
  • Calculating council rates and municipal taxes.

Site value is applicable for:

  • Assessing land tax liability in most states.
  • Understanding the inherent land value for a potential development site.

So for council rates, your property’s ICV affects the tax amount, while land tax depends on the SV. Being aware of both values can help you review tax assessments.

Can I Estimate the Values?

There are online calculators that let you generate rough estimates of ICV and SV based on your property details. However, the official values are set by professional valuation authorities.

For formal tax purposes, valuers determine the values based on recent sales data, inspection, zoning, development potential and various other factors. This ensures standardised site values across council zones for fairer land tax.

So while estimates are helpful, rely on the statutory valuation notice for your property’s official ICV and SV applicable for property tax calculations.