Two different assets
A business and the property it occupies are different assets, even when the same family owns both. A business valuation looks at the operations: maintainable earnings, goodwill, plant and equipment, stock and working capital. A property valuation looks at land and buildings: location, zoning, improvements, comparable sales and comparable rents.
Two different assets that meet at the rent
Business valuation
The operations
- EarningsMaintainable earnings
- AssetsGoodwill, plant and equipment, stock and working capital
- The rentA cost the business pays
Property valuation
Land and buildings
- EvidenceComparable sales and comparable rents
- The siteLocation, zoning and improvements
- The rentIncome to the property owner
The two meet at the rent. A business pays rent for the premises, and that rent is income to the property owner. When the parties are related, the rent may not be at market, so both valuations need to agree on a market rent before either can be relied on. That is covered in more detail in market rent adjustments for owner-owned premises.
How valuers deal with each asset
A business valuer should not form an opinion on the value of land and buildings outside their expertise. ASIC's guidance on expert reports makes the same point in its context: where an expert needs to value assets such as real property, it should have the expertise to do so or retain a specialist. In practice, the business valuation will usually either exclude the property and assume a market rent, or rely on a property valuer's opinion for the property component.
A property valuer, in turn, will value the premises on stated assumptions: vacant possession, or subject to a lease. Where the lease is to a related business, the valuer will consider whether the rent and terms are at market.
Decision table
This table describes which valuations are commonly useful. It does not state what any law requires; the purpose, and your accountant, lawyer or fund auditor, decide that.
Which valuation is commonly useful depends on what is changing hands
What is being sold or transferred?
Business and premises together (freehold going concern)
Business valuation usually yes; property valuation usually yes
The business only, from leased premises
Business valuation yes; property valuation usually no
A property only, such as a related-party transfer of a building
Business valuation usually no; property valuation yes
| Situation | Business valuation | Property valuation | Why |
|---|---|---|---|
| Freehold going concern: business and premises sold or transferred together | Usually yes | Usually yes | Two different assets; the split matters for finance, tax and the contract |
| SMSF holds the premises and leases them to the members' business | Only if the business itself is being valued for another purpose | Usually yes, for the fund's records | The fund reports the property at market value; the rent should be at arm's length |
| Family law property pool with a business and the premises it occupies | Usually yes | Usually yes, if the premises are owned within the pool | Both may be assets in the pool; consistent rent avoids double counting |
| Sale of the business only, from leased premises | Yes | Usually no | The property is not changing hands; the lease is reviewed as part of the business valuation |
| CGT event on a property only, such as a related-party transfer of a building | Usually no | Yes | Only the property is being valued; see the ATO's list of common market valuation situations |
| Business sold, and the related-party owner keeps the property and grants a new lease | Yes | Often useful | The new lease rent affects the buyer's earnings and the property's value |
Notes on the SMSF case
The ATO's guidance for SMSF trustees says all fund assets are valued at market value when preparing the fund's accounts. A qualified independent valuer is not required for that purpose, but the ATO says trustees should consider using one where an asset is a significant proportion of the fund's value or likely to be complex or difficult to value. For real property, the guide lists evidence such as comparable sales and agent appraisals, and says net income yields are only appropriate evidence where tenants are unrelated. Business real property leased to a related party is an exception to the in-house asset rules, but the ATO also expects SMSF investments to be made and maintained on an arm's length basis. Your fund's adviser and auditor should confirm what the fund needs.
Notes on CGT and property
The ATO lists common situations that call for a market valuation, including transfers between related parties and when a home is first used to produce income. Where only a property is involved, a property valuation is the relevant report. Where a business and its premises are transferred together, each component may need its own value.
A hypothetical illustration
A family company runs a manufacturing business from a factory owned by the family trust. The company pays the trust no rent. The parents plan to sell the business to their daughter and keep the factory.
Two values are needed. The business valuation deducts a market rent, because the daughter's company will pay rent under a new lease.
Deduct a market rent in the business valuation, or part of the factory is counted twice
Does the business valuation deduct a market rent?
Yes, because the daughter's company will pay rent under a new lease
The property valuation values the factory subject to that new lease. Each asset is counted once.
No rent deducted
The business value includes income that in fact belongs to the property owner, so part of the factory's value is counted twice
Limitations
This page is general information and does not tell you which valuation a particular law, court, fund or lender requires. Requirements vary with the purpose, the jurisdiction and the documents involved. Ask your accountant, lawyer or SMSF auditor which valuation, at which date and on which basis, is needed before you order. Where an asset-heavy business owns plant or land inside the operating entity, see valuing an asset-heavy business.
Next steps
- Write down what is being valued, for what purpose and at what date, and confirm it with your adviser.
- Identify who owns the premises and whether there is a written lease at market rent.
- For the business: Valuo, and Oliver Group, the Valuo practice for restructures, tax and buyouts, prepare business and share valuations.
- For the property: APAVAL (apaval.com.au), the property valuation partner brand of Valuo, prepares property valuations.
- Ask both valuers to use the same rent assumption and the same valuation date.
Questions
Can one valuer value both the business and the property?
Each valuation calls for different expertise and evidence. Where both are needed, it is usual for a business valuer to rely on a property valuer's opinion for the land and buildings, and for the two reports to use the same rent assumption.
Is a freehold going concern sold as one price?
It can be marketed at one price, but the business and the property are still different assets. Separating them helps with finance, stamp duty, GST and CGT questions, which your advisers will want answered.
Do I need a business valuation if I am only selling the building?
Usually not, unless the business is also changing hands or the property's value depends on a lease to a related business. A property valuation is the normal starting point.
Sources
- Guide to valuing SMSF assets, Australian Taxation Office. Trustees value all fund assets at market value; a qualified independent valuer should be considered where an asset is a significant share of the fund or complex to value; real property evidence.
- What are the SMSF investment restrictions?, Australian Taxation Office. Business real property is an exception to the related party acquisition and in-house asset rules, including where leased to a related party.
- Market valuation of assets, Australian Taxation Office. Situations where a market valuation may be needed, including related-party transfers and a home first used to produce income, and what a report should contain.
- RG 111 Content of expert reports, Australian Securities and Investments Commission. RG 111.99: an expert should have the expertise to value assets such as real property, or retain a specialist to do so.
Cite or reuse this page
Valuo Insights team (2026). Business valuation, property valuation, or both?. Valuo. https://valuo.com.au/insights/business-valuation-or-property-valuation/ (updated 14 November 2026).
Quote short passages with attribution and a link to this page. Charts and tables created by Valuo may be republished unchanged with the credit "Source: Valuo (valuo.com.au)" and a link. Third-party sources keep their own terms. See the reuse terms.
General educational information, not financial, tax or legal advice. Worked examples are hypothetical and do not value a real business. A valuation depends on its purpose, the evidence and the agreed scope.