Divorce Property Settlement: Is Your Block Worth More as a Development Site?

Development Value Changes the Property Settlement Equation

In divorce property settlements, the family home is usually the largest asset. If that home sits on a large block, a standard residential valuation may significantly understate its true market value — and one party may inadvertently receive less than their fair share.

The Problem with Standard Valuations

Family law property settlements typically rely on sworn valuations from licensed valuers. These valuations assess the property as a single residential dwelling — which is correct for mortgage purposes but may not reflect what a developer would pay.

Example:

• Sworn valuation (single dwelling): $950,000
• Development site value (4-townhouse potential): $1,250,000
• Understated by: $300,000

If the property is being sold as part of the settlement, and only one party knows about the development potential, the other party loses out.

When Development Value Matters

It Matters If:

• The block is over 600m² in a suburb with developer activity
• The property is going to be sold (not retained by one party)
• The valuation seems low compared to recent sales of similar blocks
• You have received developer interest or letterbox cards
• Neighbouring properties have been developed

It May Not Matter If:

• The block is small (under 500m²) with no subdivision potential
• One party is retaining the property as their home
• The property is in a character/heritage area with restricted development
• Both parties agree on the value and sale approach

Protecting Your Interests

Request a Development-Focused Appraisal

In addition to the sworn valuation, obtain an appraisal that considers the property's highest and best use. This is particularly important if:

• You suspect development potential exists
• The other party has received developer interest
• You want to ensure the settlement is based on true market value

Ensure the Sale Process Captures Full Value

If the property is to be sold, the sale method matters:

• Standard listing to homebuyers: captures residential value only
• Targeted marketing to developers: captures the development premium
• EOI process: creates competition and maximises price

Insist that the appointed agent markets the property to developers (not just homebuyers) if the block has development potential.

Consider Independent Advice

Engage a development-focused property advisor to review the valuation and advise on the likely development value. This is separate from your family lawyer and provides a second opinion on the property's true worth.

The CGT Advantage in Divorce

Property transfers between spouses as part of a court-approved settlement are CGT-exempt (rollover relief). This means:

• No CGT is payable at the time of transfer
• The receiving party inherits the original cost base
• CGT becomes payable when the receiving party eventually sells

If one party retains the property and later sells to a developer, the development premium is captured but CGT applies based on the original purchase price.

Fair Outcomes for Both Parties

The goal is not to advantage one party over the other — it is to ensure both parties understand the property's true value so the settlement is fair.

If your property is being assessed as part of a divorce settlement and you believe it may have development potential, contact ACRES for a confidential development value assessment.

Daniel McCormack

Managing Director, ACRES — Australian Commercial & Residential Group

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