Assessing and coding real estate details 106-07100130

The current market value of any real estate, excluding the principal home, is considered an asset including:

• house, unit or flat (other than the principal home)
• vacant land
• self-contained flat or other dwelling on the same title as the principal home that is rented to someone other than a near relative
• part of the principal home (for example, a spare room or a shed) used primarily or solely for business purposes. This portion of the customer's home should be included as a business asset and coded as part of the customer's business assessment
• land that is excess curtilage. See Assessing house and curtilage
• commercial, retail or industrial premises
• shop and dwelling: where the customer’s principal home is attached to, under the same roof line as, or on the same lot as a retail shop or commercial/industrial/retail building
• hobby farms/market gardens
• water licences

For details about the valuation of real estate and other assets, see Valuation of real estate and other assets.

Customers must tell Services Australia if they receive any income from real estate. This may be from letting, leasing or rental of a house, shop or land.

When assessing income from real estate, expenses related to that income (such as interest payments, rates and maintenance costs) are deducted from the gross income to calculate the current net income. The customer is required to provide their latest tax return to determine the net income they receive.

If a tax return is not available, the one third rule is used as an interim measure until either of the following are provided:

• the income tax return for the person or business that owns the property (including the rental property schedule showing rental income and deductions), or
• financial statements such as a profit and loss statement

If the customer did not lodge an income tax return, as their income was too low, a profit and loss type statement must be provided.

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.

The address details of a customer's real estate asset must be recorded in a way that allows the property to be located by both customers and external valuers. This includes both street location and land or title reference numbers.

An address has minimum requirements for coding to ensure it can be identified. The address can be:

• Urban - areas suitable for or occupied by private homes, generally in a town or city and not used for primary production
• Rural - areas suitable for or used for primary production
• Complex - located within a complex site such as a retirement village, caravan park or large unit complex

The asset value and net income of overseas real estate is coded on the Foreign Income/Asset Detail (FID) screen. The asset value is coded in the relevant foreign currency and the system converts it to Australian dollars. The amount automatically adjusts each month with changes in the exchange rate.