Understanding Market Value: When we talk about the "market value" of land, we mean figuring out its highest and best use. Basically, we look at what the land could be used for that would bring in the most profit. Usually, if land can be split into smaller parts (like for building houses), its value goes up.
Apportioning Costs for Each Lot: When dealing with a project like dividing land to sell, we need to figure out how much of the total cost applies to each piece of land. Some costs, like those directly related to one lot, are easy to assign. But other costs have to be divided up among the lots. Here are some ways to do it:
- Anticipated Selling Price: We divide costs based on how much we expect each lot to sell for compared to the total sales.
- Metre Frontage: Costs are divided based on how much frontage (length along the road) each lot has.
- Area: Costs are divided based on the total size of each lot.
- Number of Lots: Costs are divided equally among all the lots if they're all the same.
Usually, the method we choose depends on whether the lots are all identical or not.
Got questions? Reach out to Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar.
