Capital Improved Value vs Market Value — Every State's Rating Base Explained

Open a Victorian rates notice and you’ll find three different values for the same property: a capital improved value, a site value, and a net annual value — none of which matches what the house next door just sold for. This is not an error. Australian property is measured by statutory valuation bases that are defined in legislation, produced by mass valuation, and frozen at a legal valuation date — and every jurisdiction uses its own mix. This article explains what capital improved value actually is, how it relates to the other bases (site value, land value, AAV, GRV, AUV, UCV), which value feeds which bill in each state, and why none of them is your market value.

Every definition quoted below was verified against the current consolidated legislation or the official Valuer-General source for each jurisdiction — sources at the end.

What is capital improved value?

Capital improved value (CIV) is the total value of a property — land plus buildings and all other improvements — as defined in Victoria’s Valuation of Land Act 1960: the sum the land “might be expected to realize at the time of valuation if offered for sale on any reasonable terms and conditions which a genuine seller might in ordinary circumstances be expected to require”. It is a statutory estimate at a fixed valuation date, not a live market price.

One property, six official values

Statutory bases fall into three families, and the differences are structural, not cosmetic:

1. Improved-value bases — land plus buildings: Victoria’s CIV, South Australia’s and Tasmania’s capital value. These are the only bases that approximate the value of the property as a whole.
2. Unimproved bases — the land as if the buildings didn’t exist: NSW’s land value, Queensland’s and Victoria’s site value, WA’s unimproved value (UV), the NT’s unimproved capital value (UCV), and the ACT’s average unimproved value (AUV) (a 5-year average). By construction these sit well below the price of a built property — comparing them to a sale price is a category error.
3. Rental bases — an annual rental figure, not a capital sum: WA’s gross rental value (GRV), Tasmania’s assessed annual value (AAV), Victoria’s net annual value (NAV).

“Market value” belongs to none of these families: it is the price a specific property would achieve in a negotiated sale today, assessed individually — which is what a market valuation provides.

Quick reference — which value feeds which bill

Three traps in this table are worth naming. First, NSW’s 3-year averaging applies to land tax only — council rates use the single-year land value. Second, Victorian land tax runs on site value, not CIV — the value on your land tax assessment is deliberately lower than the one on your rates notice. Third, the NT’s 30-day objection window is half everyone else’s.

Victoria in detail — where “CIV” comes from

CIV is Victorian statutory vocabulary, defined in s 2(1) of the Valuation of Land Act 1960 alongside its two siblings. Site value is the same hypothetical sale “assuming that the improvements (if any) had not been made”. Net annual value is the greater of the estimated annual rental value or 5% of the CIV — and for residential and farm land, simply 5% of CIV. Councils choose their rating base under local government legislation, and most rate on CIV; the Emergency Services and Volunteers Fund levy (which replaced the Fire Services Property Levy on 1 July 2025) is also charged on CIV. Since 2019 all Victorian rating valuations are conducted annually under the Valuer-General.

So a Victorian owner’s rates notice carries all three values, each doing a different job: CIV for rates and the ESVF levy, site value feeding the land tax assessment, NAV mostly for commercial occupancy contexts.

Why your CIV is not your market value

Statutory values and market value diverge for three structural reasons:

1. The valuation date lags. Every statutory value is fixed at a legal date — 1 January in Victoria, SA and the ACT; 1 July in NSW and the NT — and bills issued months later still rely on it. Where cycles stretch further (Tasmania’s ~6-year fresh valuations with adjustment factors between; WA’s ~3-yearly metropolitan GRV), the gap between the statutory number and the current market can span years of price movement.
2. Mass valuation, not inspection. Valuers-General value hundreds of thousands of properties statistically, from sales evidence and property data — generally without individual inspections. Recent renovations, condition, and property-specific attributes are exactly what a mass model misses.
3. Statutory assumptions. The definitions assume an unencumbered fee simple, a hypothetical genuine seller, and — for the unimproved bases — that the buildings were never built. They also generally value the land on its existing permitted use rather than a speculative highest-and-best-use.

The practical consequence cuts both ways. A CIV or capital value can understate a renovated property (good news for the rates bill, bad news if you rely on it in a family settlement or estate), and can overstate a property with defects the model can’t see (you’re paying rates and levies on value that isn’t there). Either way, the statutory number is evidence of nothing but itself — court proceedings, family law settlements, CGT events and lending decisions all require an actual market valuation of the specific property.

Challenging a statutory value

Every jurisdiction lets an owner object within a statutory window from the notice of valuation — 60 days in most states, 2 months in Victoria, and only 30 days in the NT — on prescribed grounds (the value is too high or low, property particulars are wrong, apportionment errors). Beyond objection lies review or appeal: the Land and Environment Court in NSW, the Land Court in Queensland, VCAT in Victoria, and the specialist valuation tribunals elsewhere.

Because land tax is recurrent, a successful objection compounds every year — and the strongest evidentiary base for one is an independent valuation demonstrating what the land was actually worth at the statutory valuation date. We covered the objection workflow in detail in how to challenge your land valuation, and the recurring-tax stakes in the property taxes total-cost comparison.

Methodology

Definitions were verified verbatim against the consolidated legislation for each jurisdiction — Valuation of Land Act 1960 (Vic) s 2(1); Valuation of Land Act 1916 (NSW) s 6A (current consolidation); Land Valuation Act 2010 (Qld) ss 7, 19, 26; Valuation of Land Act 1978 (WA) s 4; Valuation of Land Act 1971 (SA) s 5(1); Valuation of Land Act 2001 (Tas) s 3 and s 11(5); Rates Act 2004 (ACT) ss 6 and 13A; Valuation of Land Act 1963 (NT) s 9 — supplemented by official Valuer-General and revenue office guidance for cycles and objection windows. Rating-base choices marked “most councils” reflect that VIC, SA, TAS and NT legislation lets each council choose among permitted bases; check your own council’s notice. WA’s “UV = site value” equivalence applies to townsite land only — rural and pastoral land uses different formulas. Tasmania’s fresh-valuation interval and WA’s GRV cycle are stated as the Valuers-General describe them in guidance; exact statutory scheduling varies.

Frequently asked questions

What does capital improved value mean?

Capital improved value is the statutory value of a property as a whole — land plus buildings and other improvements — that a genuine seller could expect to realise at the legal valuation date, as defined in Victoria’s Valuation of Land Act 1960. It is produced by mass valuation for rating and levy purposes, and appears on Victorian rates notices alongside site value and net annual value.

Is capital improved value the same as market value?

No. CIV is a statutory estimate fixed at a valuation date (1 January in Victoria), produced by mass valuation without inspecting your property, under assumptions set by legislation. Market value is what your specific property would achieve in a negotiated sale today, assessed individually. A CIV can sit above or below true market value — particularly after renovations, damage, or fast market movement since the valuation date.

What is the difference between capital improved value and site value?

CIV values the property with its buildings and improvements; site value values the same land assuming the improvements had never been made. In Victoria the two sit on the same rates notice and do different jobs: most councils levy rates on CIV, while land tax is assessed on site value — which is why the value on your land tax assessment is lower than the one on your rates notice.

Why is my council valuation different from what my house would sell for?

Three structural reasons: the valuation is frozen at a legal date months (sometimes years) before your bill; it is produced by mass valuation models that never inspected your property; and it is built on statutory assumptions — and if your state rates on an unimproved basis (NSW, QLD, ACT, NT), the number deliberately excludes your house altogether.

Can I challenge my capital improved value or land value?

Yes — every jurisdiction has a statutory objection process, generally within 60 days of the notice (2 months in Victoria, only 30 days in the NT), on prescribed grounds. An independent valuation as at the statutory valuation date is the strongest evidence for an objection, and because land tax recurs annually, a successful objection keeps paying off year after year.

Sources

• Valuation of Land Act 1960 (Vic) — s 2(1) definitions of capital improved value, site value, net annual value
• Valuation of Land Act 1916 (NSW) — s 6A land value; Valuer General NSW
• Land Valuation Act 2010 (Qld) — ss 7, 19, 26, 29
• Valuation of Land Act 1978 (WA) — s 4; Landgate valuations
• Valuation of Land Act 1971 (SA) — s 5(1); Office of the Valuer-General SA
• Valuation of Land Act 2001 (Tas) — s 3, s 11(5); Office of the Valuer-General Tasmania
• Rates Act 2004 (ACT) — ss 6, 13A (AUV averaging)
• Valuation of Land Act 1963 (NT) — s 9 UCV

This article is general information, not advice on your rates, land tax or objection position. Statutory bases, cycles and windows change with state budgets and valuation programs — confirm with the relevant Valuer-General or revenue office before acting.

See also

• Council Rates by Capital City Australia 2026 — how each capital’s rating system uses these bases
• Land Tax by State Australia — 2026-27 — the thresholds and rates applied to the unimproved bases
• Property Taxes in Australia — The Total Cost by State 2026-27 — what the bases add up to on a real purchase
• How to Challenge Your Council Land Valuation — the objection workflow step by step
• Australian Property Valuation Statistics 2026 — the market data context

Last verified: 19 July 2026 against the consolidated legislation and Valuer-General guidance linked above. Statutory valuation settings change with state budget and valuation cycles — this article is reviewed against them.