What is an appraisal and why does it matter in taxation?
An appraisal is a report drawn up by a technician specialised in valuation and appraisal, who determines the value of an asset according to technical criteria. It distinguishes between market value, cadastral value and reference value, and is valid for six months. These concepts are key to making confident financial and tax decisions.
Valuation methods accepted for real estate.
Three accepted valuation methods are used for real estate assets: comparison, cost and income capitalisation. Their application depends on the type of property, the availability of data and the purpose of the valuation.
Common uses of real estate valuation
- Mortgage guarantee.
- Accounting/tax valuation and judicial or expert valuation.
- Valuation for sale and purchase, distribution of inheritance or divorce proceedings.
- Determination of assets in insurance companies, real estate collective investment institutions and pension funds.
- Internal or strategic advice.
Company valuation: approaches that the market recognises
At business valuation comparable transactions, comparable quoted prices and discounted cash flows are combined:
Comparable transactions. They calculate the number of times a financial parameter has been paid in actual transactions to obtain a range of prices.
- Advantage: it is in line with market value.
- Challenge: find comparables by sector, size and geographic area.
Comparable listed companies. They look at what multiples similar companies are trading at and adjust for smaller size and illiquidity. The challenge, again, is real comparability.
Discounted cash flows (DCF). It assesses the ability to generate income over a horizon (e.g. 5 years + terminal value) by bringing it to present value with a discount rate.
- Advantage: collects growth expectations (useful for startups);
- Disadvantage: requires a credible business plan and assumptions that may not be met.
Valuation of art, antiques and jewellery: comparative method and key factors
At art and valuables the valuation criterion par excellence is the synthetic or comparative method, which contrasts the work with similar pieces on the national and international market, considering elements that affect the final result. On the other hand, in jewellery, the total weight and type of metal, purity (carats or thousandths), type and size of the stones, brand or designer and the state of conservation have an influence.
How do we work at Gesvalt?
We have specialised experts and a specific methodology that cross-checks information with Galleries and Auction Houses, considering, among other factors: author, place of residence, artistic movement, period or style, size of the work, authenticity and state of conservation.
How can we help you?
Art and antiques appraisals, The following are accepted by organisations and financial institutions for a variety of purposes:
- Insurance of works or collections.
- Advice on purchase and sale transactions.
- Distribution of assets in inheritances.
- Expertise for damage, theft or fraud claims.
- Donation in payment of taxes.
- Accounting reconciliations for financial purposes.
What kind of work do we do?
Ratings:
- Art (painting, engraving, drawing, watercolour, photography...).
- Sculpture (relief, wood, stone...).
- Antiques.
- Decorative arts (tapestries, ceramics, period furniture...).
- Relics.
- Valuables and jewellery.
Cataloguing:
- Cataloguing of art and sculpture collections for individuals, companies and public institutions.
- Inventory and labelling of artistic typologies.
This work is complemented by an online management system: a deliverable available 24/7/365, ready to store all the visual, graphic and documentary information of the asset or collection.
Key ideas for making the right decision on asset valuation for tax purposes
- Define what value you need (market, cadastral or reference value) and for what purpose.
- Choose the appropriate method: comparison, cost or capitalisation of rents in real estate; multiples and flows in companies; comparative in art.
- It requires accredited expertise and traceability of sources (market, transactions, galleries and auctions).
- Check the validity of the appraisal (six months) before taking any action.
At Gesvalt we provide you with specialised experts and teams with proven methodologies to value real estate, companies, art, antiques and jewellery with technical rigour and validity before organisations and financial institutions.