Assessing and coding real estate details 106-07100130

A customer advises:

• their home property is on more than one title
• their home property is more than 2 hectares (5 acres)
• their home property includes a business premises and that premises is used primarily or solely for business purposes
• they own any real estate other than their home property, in Australia or overseas
• they have entered aged care on or after 1 January 2017 and are renting their former principal home

Has the customer provided details of their real estate?

• Yes:
• A MOD R has been returned, or details have been provided in an online update or online claim for payment go to Step 2
• For properties located overseas, go to Step 3
• No:
• Issue a MOD R to get details of the real estate
• Send this with a Request for Information (RFI) letter requesting completion of the MOD R, including a copy of a rates notice or certificate of title. The rates notice may show the legal reference details of the property
  Note: for real estate involving house and curtilage and multiple titles, only the certificate of title or title documents are needed. For other real estate, the rates notices may be sufficient
• For medium to large rural businesses/commercial properties, check the following link to decide if a Rural Property Questionnaire form (Q454) should be issued. To issue a Q454, see Creating an Online Advice (OLA), including within an existing activity
• Procedure ends here until the forms are returned

Check that all details are fully complete (including the 'Authority to inspect the property') and that all required supporting documents are included. For example:

• loan statements
• recent purchase documents
• council rates notice
• documents for property held as security
• water rights, allocation or licence documents
• residential site contracts for retirement or lifestyle villages

For mortgaged properties

If the property is mortgaged check the following documents have been provided:

• documents to verify what asset the loan was/is secured against and
• the latest mortgage statement, or
• a letter from the bank with the outstanding balance of the loan

If there is a loan agreement, it must show which asset(s) are held as security against it. See Loans and liabilities against assets.

Note: if a customer borrows money to purchase a property other than their own home, and the loan is secured by a mortgage over their home or any other assets, the debt cannot be offset against the value of the investment property. See the Legislation links on the References page.

Have all required documents been provided?

• Yes, go to Step 4
• No, make a request for the information. Procedure ends here until documents are returned.

Record net assessable income (gross income minus any allowable deductions) and asset values of overseas real estate (market value less any allowable loans or liabilities) on the Foreign Income/Asset Detail (FID) screen, with REA in the Type: field.

Code the asset value in the relevant foreign currency and the system will convert it to $AUD. The asset value will automatically update with variations in exchange rates each month. A property ID number is not generated on the FID screen.

To determine if a valuation of the property is required, see Valuation of real estate and other assets.

For general coding advice for the Foreign Income/Asset Detail (FID) screen, see Foreign income and assets.

Procedure ends here.

Real estate is assessed as

• primary production assets or
• a non-primary production asset

This allows negative net primary production assets to be offset against other primary production assets under the primary production aggregation rules.

Are the real estate income and assets already coded on the REBS screen?

• Yes, and:
• a current customer (or partner) has provided a new estimated value for the property, see Maintaining the value of real estate assets on customer records
• the customer (or partner) has lodged a new claim for payment, see Valuation of real estate and other assets
• property has been sold or gifted, see Assessment and sale of real estate and timeshare asset
• a business has ceased or sold, see Business has ceased or sold
• for any other correction or update, see Table 2, Step 2
• No, go to Step 5

New real estate should only be linked to a business where it is unavoidable. For example - a non-primary production business where there is a liability over all business assets (real estate and other) and the value of the net business excluding the real estate are negative. Real estate is not to be linked to a business unless advised and assessed by a Complex Assessment Officer (CAO).

Is the real estate to be linked to a business?

• Yes, see Table 2, Step 1
• No, see Table 2, Step 2

To code the business details, see Factors to determine self-employment.

The business details must be updated on the Real Estate/Business Identifying (REBI) screen before the real estate can be linked to the business. Go to Step 2.

If new real estate is to be coded as part of a new claim assessment, make the update within the new claim activity.

The REBI screen is used to record the type, description and address details of a business or real estate in Australia.

E607CQ: Real estate information must be recoded if the customer's relationship status has changed since the Real Estate (RE) screen was last updated.

Complete the following fields on the REBI screen:

• Real Estate/Business Type: select the most relevant Real Estate/Business type from the dropdown to make sure it is assessed correctly, see Resources page for more information. Note: if a customer owns a block of units on one title, code as one property entry on REBS (not one entry for each unit). If separate titles are held for individual units/properties within the same complex, these should be coded as individual entries on REBS as separate properties
• Description: this field is not compulsory but can be used to enter a business or property name
• Principal Home: enter 'Y' for ’Yes’ if the real estate is the customer's principal home or 'N' for ‘No’ if not the principal home. Note: if a business is being updated coding of this field is not required
• Sold/Gifted/Ceased: update if sold, gifted/transferred, no longer assessable or business has ceased trading, enter valid code using field help '?'
• Authority to inspect: 'Yes' or 'No'. It is important that this field is coded as it is required by the agency's third party contracted valuers to arrange access to the property for onsite inspections. Note: where a customer changes their response to the authority to inspect it must be updated. For example, if a customer provides a new or updated MOD R or A1614 form and previously had 'Yes' but it is now 'No', it is important this field is updated to reflect the most recent instructions. The Authority to inspect must be able to be supported. Written evidence of the authority to inspect must be available to view on the customer's record. If it is not available to view, this field should be updated to 'No'
• Land Titles Reference: enter the land title reference:
• if the property has multiple land title references, record each individual reference
• if there are multiple lots, record each lot and plan number. If more room is required, additional lots/plans can be noted on Real Estate Valuation Information (REVI) in the Other Circumstances field
• if the title reference has not been provided by the customer, most rates notices will contain land reference numbers. Refer to Resources for examples
• if the property is to be assessed under the extended curtilage provisions, complete the Other Circumstances: field on the REVI screen with the title reference principal home is on
• if the property includes a water licence, complete the Other Circumstances: field on the Real Estate Valuation Information (REVI) screen with the water licence reference number and details
• if the property is being used as security for the Home Equity Access Scheme, the text recorded in the Land Titles Reference field(s) will show in correspondence to the customer. Changes should be made only by the Home Equity Access Scheme National team (region code PLS)
• Multiple Titles: this field is for information only. This field is used for real estate only, not for business details. Three options are available 'Y' for Yes, 'N' for No. Blank is the default. Leave blank if unknown. Note: code 'N' for 'No', where the customer's property has a single title document, even if it is made up of multiple lots. Code 'Y' for 'Yes', where a customer's property is on multiple titles. If all titles for the one property are adjoining, record as one entry only on REBS.
• Address: Town/Suburb: Postcode: State: Country: code the address details. The customer must uniquely identify the location of any real estate or business site they own or have an interest in. For more details on coding a specific address type, see Table 3
• Source: DOR: Action: code appropriate source, date of receipt and action code

If a:

• business is being recorded on the BUS screen, go to Step 3
• property is being recorded for the RE screen, go to Step 4

Real estate should not be linked to a business unless advised and assessed by a Complex Assessment Officer (CAO). Linking real estate to a business will not allow the real estate to be included in the risk-based approach to real estate assessment.

If full details of the business are not known, complete as much as possible to allow the link to the real estate to be made. For example, MOD F and Income Tax Return has not been supplied.

Update business details by coding the following fields:

• Event Date: appropriate event date
• Link New Real Estate?: 'Y' for yes
• Valuation Source: the appropriate source
• Net Assets Customer $: the business net value for customer
• Net Assets Partner $: the business net value for partner
• Income p.a. $: income profit of business per annum
• % Income (C/P): percentage of income
• Income Earned (C/P)?: if income is earned by customer and/or partner

See:

• Assets and liabilities of a business for full details on how to determine business income and assets for a business
• Income and expenses of a business for details on determining business income

Note: if the real estate is linked to a business, the income, deductions and asset fields will not present.

Update real estate details by coding the following fields:

RAF Code: used to identify that the income and asset value of the farm is exempt from the gifting provisions under the Retirement Assistance for Farmers (RAF) Scheme. The income and assets will be included in the Net Income/Net Assets calculated on this screen but will not be included in the Total Income/Asset calculation.

Bus Link: shows the business Ref Id if the real estate is owned by a business.

Curtilage Type:

• GRF - grandfathered, for customers whose curtilage is assessed under the grandfathered savings provision for real estate, grandfather's concessions for real estate before 1 January 2007. Note: existing customers with curtilage recorded as of 31 December 2006 were automatically assessed as curtilage type GRF. Make sure that a new assessment of curtilage is undertaken, and the curtilage type is updated to the appropriate code
• EXT - extended, where the customer satisfies the extended land use test
• PLU - for customers who do not satisfy the extended land use test
• Leave field blank - for properties that are not the principal home
• For more details on house and curtilage assessments, see Assessing house and curtilage

Event Date: the date the change in circumstance occurred, for example, the date the property was rented out or came into ownership. Note: if the customer is advising of an undisclosed property, valuations may be required for dates in the past, or historical dates. For example, the date the customer obtained the property (purchased, inherited) or the date payment was granted. See Valuation of real estate and other assets for more details.

Actual Valuation Date: the date of the previous valuation. This field does not need to be manually updated.

Current Market Value $: the amount should represent the current value of the whole property.

• including the principal home (if appropriate) and any other dwellings
• It should include the value of any assessable Water Rights related to the property
• Note: the assessment of water assets for Farm Household Allowance (FHA) customers is different than the assessment under social security policy, see Assessing assets for Farm Household Allowance (FHA)
• Other business assets, including farm sheds, equipment and machinery should be recorded as Other Assets on the Other Assets (OASS) screen and not included in the whole property valuation
• Property values shown on council rates notices are for calculating council rates, fire and ambulance services or other taxes. They do not always indicate the current market value of a property
• A current market valuation shows how much a property would be expected to sell for in the current market

Asset Valuation Source: is the source of the real estate valuation.

• For new properties, the valuation source will generally be CLI

If the property has previously been recorded and the customer is providing a new estimated value, see:
Maintaining the value of real estate assets on customer records for customers (and/or) partners who are current on payment
Valuation of real estate and other assets for customers (and/or partners) who have lodged a new claim

Current House & Curt. $: enter the value of the principal home and surrounding curtilage applicable. For assessment assistance, see Assessing House and curtilage. Only one item of real estate with a home and curtilage amount can be coded for each customer. For properties being assessed under:

• Private Land Use - code the value of the principal home and the surrounding 2 hectares of land only (this value must be less than the current market value field)
• Extended land Use
• if the whole property is on one title only, code the value of the principal home and all the land on the title. (this value must be the same as the current market value field)
• if the property is on more than one title, code the value of the principal home and all the land on the same title as the home (this value must be less than the current market value field)

Single titles may contain several lots. It is important to assess house and curtilage according to the title/s.

If any part of the property is being used for commercial or business purposes the customer may not be entitled to a house and curtilage exemption.

If the customer is providing an updated value for House & Curt only, treat the update the same as if the customer were providing an updated estimate for the whole property.

For examples on house and curtilage assessments, see the Resources page.

House Contents $: code the value of house contents that belong to the customer (if any)

• Note: the system does not apportion house contents based on the asset ownership percentage coded. If the customer is single, 100% of the value coded in this field is applied to the customer. (If they are partnered, 50% is applied to each partner)
• If this property is the customer's home do not record house contents here. Household contents and personal effects are recorded on the Other Assets (OAS) screen

Other Assets $: if there are any other assets related to this real estate that belong to the customer, code their value. The system does not apportion other assets based on the asset ownership percentage coded.

Livestock $: if there is any livestock related to this real estate that belongs to the customer, code the value of the livestock. The system does not apportion the value of livestock based on the asset ownership percentage coded.

Mortgage/Loan $: if there are mortgages or loans on the real estate, code the value of the mortgages or loans. For help with coding, see Loans and liabilities against assets.
Note: if the property is not a principal home and is used as security for a loan payment under the Home Equity Access Scheme (HEAS), a Complex Assessment Officer will update this field with the HEAS debt balance.

Former Principal home for RCA purposes: only for residential aged care (RCA) customers. If the property was the customer's former principal residence at the time of entering aged care, a Y indicator is required to make sure:

• the property remains exempt for the RCA asset assessment, and
• Included in the Income Support Payment asset test assessment

• Net Income $: net income derived from the property. Note: customers who enter aged care on or after 1 January 2017 will have the net rental income from their former principal home assessed as ordinary income. The former principal home will be exempt from the assets test for 2 years after the customer vacates it to enter a care situation
• Net Assets $: net monetary value of the assets
• % Income Owned: the customer's percentage of the income derived from the property
• % Asset Owned: the percentage 'interest' the customer has in the property
• Work Bonus Income %: this field is only completed for customers with self-employment income earned from personal exertion. See Work Bonus and balance for pensioners of Age Pension age
• Gross Annual Income $: the total income derived from the property
• Income Valuation Source: the source on which the valuation figures are based
• Annual Interest $: the interest amount paid (in whole dollars) for a loan or mortgage. This is usually obtained from the rental property schedule of the business, a personal ITR or a profit and loss type statement. Interest payments on a mortgage for the property concerned are allowed as an additional deduction from the amount of income to be assessed
• Allowable Income Dedns $ pa: the allowable deductions from the gross income, not including the interest paid for loans or mortgages. Details are usually obtained from the rental property schedule of the business, a personal ITR or a profit and loss type statement. For more details, see Business deductions
• Valuers Job Number: used to record the agency's contracted third-party valuer's reference number for their valuation if the property was valued by them
• Valuers Property Number: the number assigned to the property by the agency's third-party valuer when it was first valued by them (this field is not required)

See:

• How the system derives the net asset value of real estate
• Assessing income from real estate and timeshare
• Work Bonus and balance for pensioners of Age Pension age

The REVI screen records details about the property that is required for a valuation to occur, such as property size, number of buildings.

All property information available should be recorded on the REVI screen, including land area, number of rooms, construction materials, improvements, purchase details if available, authority to inspect and details of person to be contacted for an inspection.

Record details of any water licences and water allocation attached to the property on the REVI screen in the Other Circumstances: field.

The Purchase Ind: field records who purchased the property. 'Y' should be recorded if the customer and/or their partner purchased the property. This field should be coded 'N' if the property was not purchased but inherited or gifted.

The Improvements: field allows free text. Use this field to record any more details provided by the customer, for example, 'property has water damage' or the 'property has recently been renovated'. Providing all available information will enable a successful and accurate valuation.

Note: more details or instructions can also be recorded on the Other Circumstances: field. If the property is to be assessed under the extended curtilage provisions, complete the Other Circumstances: field on the REVI screen to show which title the principal home is on. If any part of the property is being used for commercial or business purposes, record the details of what is to be included/not included in the valuation.

Record real estate type OTH for assets such as beach boxes, mining leases and car park spaces.

Record real estate type SCF for self-contained flats and other dwellings on the same title as the principal home that are currently rented (other than to a near relative). See Assessing house and curtilage.

Valuation

For new properties or for customers making a new claim for payment, see Valuation of real estate and other assets for details about when a valuation is required.

For existing properties or for customers already current on payment, see Maintaining the value of real estate assets on customer records for details about when a valuation is required.

Is there an income value associated with the real estate?

• Yes, go to Step 9
• No, go to Step 10

On the RE screen update:

• % Income Owned: the percentage of interest the customer and/or partner has in the income from the real estate
• Income Valuation Source: select the relevant code of where the income details have come from
• Gross Annual Income $: code the gross annual income for the real estate
• Annual Interest $: the interest on any mortgages or loans associated with the real estate, see Assessing income from real estate and timeshare for more details
• Allowable Income Dedns $ pa: any allowable deductions for the real estate, see Assessing income from real estate and timeshare for more details

Note: unless there is an amount in the Mortgage/Loan: field, the Interest Expense: field cannot be recorded. Where interest expense is an allowable liability, but the mortgage is not an allowable deduction, an amount of $1 must be recorded in the Mortgage/Loan: field.

See Loans and Liabilities against assets for more details about allowable liabilities and apportionment.

• Code the source of the information in the Source: field
• Code the date of receipt of the information in the DOR: field
• Complete the activity on the Assessment Result (AR) screen and record details on a DOC

An urban address is real estate such as houses, flats and units which are in towns or cities with access to public amenities such as shopping centres, town water and post offices.

Australia has national address standards, however when changes occur for street addresses there is no requirement for councils to renumber existing urban properties. For example, in new subdivisions a lot number may still exist where road numbers have not yet been allocated. In these cases, a lot number must be recorded. Where street numbers have been allocated, the rates notice may still refer to a lot number and not show the street number.

An urban address requires:

• Unit Number (optional)
• Level Number (optional)
• Number or Number Range or Lot Number
• Building Name (optional)
• Private Street Name (optional)
• Utility Name (optional)
• Road Name
• Suburb/Locality
• State/Territory
• Postcode

Example:

Address Line 1: 234 High St or 2/234 High St

Line 2: leave blank

Town/Suburb/Line 3: Balwyn

Postcode: 3103

State: VIC

Country: Australia

A rural address is usually real estate used for primary production purposes or bush blocks.

• Rural addresses use a mixture of property names, lot numbers and delivery points. For example, Roadside Mail Bag (RMB), Rural Delivery (RD) numbers
• Postal delivery details (RMB or RD) must not be coded in place of the correct address
• It is important to get title details from the customer to identify the property, as often local knowledge is required to correctly locate a property
• A property name such as 'Greenacres' or 'Splay Corner' is not sufficient. A street address or title reference is required to identify the property

Over the past few years, most rural properties have been renumbered with a unique number determined by the property's distance from the starting point of the road, with odd numbers to the left, even to right. For example, number 600 may be 6kms from the start of the road. Councils do not always update Rates Notices to reflect the new numbering and Lot numbers may still appear on the account. A street number if available is the preferred format to a Lot number.

The rural address for a site located in Australia must be:

• Property Name (optional)
• Number or Lot Number, do not use RMBs
• Road Name
• Locality
• State/Territory
• Postcode

Example:

Address Line 1: Barwick Ridge Farm

Line 2: Lot 29 Richardson Rd

Town/Suburb/Line 3: Barwick

Postcode: 3199

State: VIC

Country: Australia

The most common complex sites are industrial parks, caravan parks, shopping centres and lifestyle/retirement villages. A complex address is used to identify a location in a larger complex site.

Premises (land and buildings) on these sites sometimes have their own internal address to find the specific location. For example, retirement villages and caravan parks often create their own internal street names to better locate their sites and villas for owners and visitors. The address of the entire complex should be used.

A complex address for a site located in Australia must be:

• Address-site Name (optional)
• Number or Range of numbers
• Road Name
• Suburb/Locality
• State/Territory
• Postcode

Example:

Address Line 1: Unit 23, Blue Hills Retirement Village

Line 2: 234 High St

Town/Suburb/Line 3: Balwyn

Postcode: 3103

State: VIC

Country: Australia