Profits Method
Capitalise the trading performance of a specialised business attached to the property — for assets where value is inseparable from the trade.
Methodology
The profits method (also known as the trading-accounts approach) values properties whose value is inseparable from a specialised trading business operated from them. The valuer derives a fair maintainable trade (FMT) from historic and projected trading accounts, deducts a notional operator’s wage, then capitalises the residual at a market-derived years’ purchase or yield.
The Insitive module ingests trading accounts from your in-house API or CSV upload, normalises them to a fair-maintainable basis, and benchmarks each line against industry datasets (where licensed). The output is a going-concern value that can be apportioned between land, buildings, plant, and goodwill for stamp duty and tax purposes.
When to use it
- Hotels, motels and serviced accommodation.
- Licensed venues (pubs, clubs) and gaming.
- Service stations, car parks and child care centres.
- Cinemas, theatres and entertainment venues.
Standards & references
- IVS 200 — Businesses and Business Interests (trade-related property), IVS 2025.
- IVS 105 — Valuation Approaches and Methods (Income Approach / profits basis).
- API Professional Practice 2021 — Australian Property Institute (adopts IVS).
- ATO TR 2002/16 — apportionment between land, buildings, plant and goodwill.
Plugin interface
Every method is a self-contained module that plugs into the Valuation App. It exposes a typed input/output schema so it can be invoked from a report writer, a workflow, or your own backend.
- tradingAccounts : TradingAccountsMulti-year P&L for the trading business.
- operatorWage : MoneyNotional operator wage to deduct.
- yp : numberYears’ purchase multiplier.
- stockGoodwill : MoneyStock at valuation + identifiable goodwill.
- fmt : MoneyFair maintainable trade.
- goingConcernValue : MoneyTotal going-concern value.
- apportionment : ApportionmentLand / buildings / plant / goodwill split.