Land tax in limbo as court rejects 'vacant' valuations
"Mr Maurici argued that the market value of undeveloped land in Hunters Hill was inflated because there was so little left and buyers were prepared to pay a premium for it."

- this is a very dubious argument. There would be no substantial premium because if you want a vacant site you can get it anytime you like by demolishing the improvement.

"He put the land value of his property at $1.25 million, based on deducting the value of a substantial house from comparable sales of improved land in the area."

No doubt there would be a very different story come the time to put the property on the market and any actual sale. This would be a good case for investigation. In all likelihood the Valuer General's valuation is under market value, and the building is overvalued. However, the SMH predictably takes the side of the landowner and affects that this is the interest of the public.

"The dogged Mr Maurici took his fight to the Land and Environment Court, the NSW Court of Appeal - and then to the High Court, where the judges found that the Chief Commissioner of State Revenue's method was defective, unduly selective and based "effectively exclusively" on four sales.

"Those were sales of vacant or substantially vacant land. They were not representative of sales in Hunters Hill. That must be so, because, as both sides accept, vacant land in Hunters Hill is scarce, if not to say, very scarce.

"The approach of the [chief commissioner], taken to its ultimate conclusion, would mean that if there were one only ... vacant parcel of land left in a district, the likely or actual recent sale price of that parcel would effectively set the value for each and every improved parcel of land in that district."

Evidence for land values consists of sales and rentals of improved and unimproved land. Because land values follow a regular pattern, it is possible to value a whole district based on a limited number of sales by establishing the value per standard unit of land, eg per square metre. Four sales of vacant land in Hunters Hill would be the most crucial evidence and give a not inaccurate picture. This evidence could be supplemented if necessary by sales and rentals of improved sites. However, one of the advantages of land value taxation is that it is much easier to value land than to value improvements. If this ruling is applied to the Valuation system in general, it would considerably (and unnecessarily) complicate the matter.

"After eight years of Labor, revenue from land tax has doubled to over $1 billion per annum," he said. "It is now clear that this revenue windfall has come off the back of a systematic policy of over-valuation of land."

Complaints such as these are always suspect. Typically, the valuations are below true market value because of lag and other reasons.

"There are 115,000 properties liable for land tax throughout the state. The original valuation of the unimproved value of Mr Maurici's land by the Valuer-General in 1998, and upheld by the Chief Commissioner of State Revenue, was $2.44 million, later reduced to $1.95 million."

Land tax in limbo as court rejects 'vacant' valuations
"Mr Maurici argued that the market value of undeveloped land in Hunters Hill was inflated because there was so little left and buyers were prepared to pay a premium for it."

- this is a very dubious argument. There would be no substantial premium because if you want a vacant site you can get it anytime you like by demolishing the improvement.

"He put the land value of his property at $1.25 million, based on deducting the value of a substantial house from comparable sales of improved land in the area."

No doubt there would be a very different story come the time to put the property on the market and any actual sale. This would be a good case for investigation. In all likelihood the Valuer General's valuation is under market value, and the building is overvalued. However, the SMH predictably takes the side of the landowner and affects that this is the interest of the public.

"The dogged Mr Maurici took his fight to the Land and Environment Court, the NSW Court of Appeal - and then to the High Court, where the judges found that the Chief Commissioner of State Revenue's method was defective, unduly selective and based "effectively exclusively" on four sales.

"Those were sales of vacant or substantially vacant land. They were not representative of sales in Hunters Hill. That must be so, because, as both sides accept, vacant land in Hunters Hill is scarce, if not to say, very scarce.

"The approach of the [chief commissioner], taken to its ultimate conclusion, would mean that if there were one only ... vacant parcel of land left in a district, the likely or actual recent sale price of that parcel would effectively set the value for each and every improved parcel of land in that district."

Evidence for land values consists of sales and rentals of improved and unimproved land. Because land values follow a regular pattern, it is possible to value a whole district based on a limited number of sales by establishing the value per standard unit of land, eg per square metre. Four sales of vacant land in Hunters Hill would be the most crucial evidence and give a not inaccurate picture. This evidence could be supplemented if necessary by sales and rentals of improved sites. However, one of the advantages of land value taxation is that it is much easier to value land than to value improvements. If this ruling is applied to the Valuation system in general, it would considerably (and unnecessarily) complicate the matter.

"After eight years of Labor, revenue from land tax has doubled to over $1 billion per annum," he said. "It is now clear that this revenue windfall has come off the back of a systematic policy of over-valuation of land."

Complaints such as these are always suspect. Typically, the valuations are below true market value because of lag and other reasons.

"There are 115,000 properties liable for land tax throughout the state. The original valuation of the unimproved value of Mr Maurici's land by the Valuer-General in 1998, and upheld by the Chief Commissioner of State Revenue, was $2.44 million, later reduced to $1.95 million."