Property Valuation

Property Valuation – for property held inside the SMSF or related Unit Trust

If you hold property, you would be well aware that a property valuation is to be provided each year –Please take note that this year will be different to prior years as the requirements have changed.

  • The ATO recently published guidance for “Evidence to support real property valuation”. This outlines the ATO’s evidence approach and requirements for property valuations.
  • Real Estate agent appraisals stating what the property is likely to sell for, based on sales in the area, on its own will not be sufficient without listing the details of those sales.
  • A comparable sales method needs to be used, whether this is from your Real Estate agent/external valuer or if a trustee assessment can be completed.
  • Property markets are diverse and there will be sufficient comparable sales to enable a valuation.

Please ask your Real Estate agent to provide you with a market appraisal/opinion using the comparable sales approach and listing those properties.

Alternatively, you can engage AGS Accounting to provide a comparable sales report from an external provider for a fee of $99 per residential property. For commercial property valuations, please contact our team for a fee estimate.

Please ensure you let our team know your preference so we are able to complete the work in a timely manner.

It is an ATO requirement to provide a valuation in line with these new requirements. Please see links below for some further information and clarification.

We have been advised by our Auditor that property valuations provided without comparable sales will not be accepted this year.

The below list has been provided detailing some of the documentation they consider acceptable evidence for substantiating the market value of real property other than an external valuation.

This includes:

  • Independent appraisals from a real estate agent (kerb side)
  • Contract of sale if the purchase is recent and no events have occurred to the property that could materially impact its value since the purchase
  • Recent comparable sales results
  • Rates notice (if consistent with other evidence on valuation)
  • Net income yield of commercial properties (not sufficient evidence on their own and only appropriate where tenants are unrelated).

Importantly it is the ATO’s view that a single item of evidence from the above list will not be sufficient on its own unless the property has been recently purchased.  Therefore, they suggest a variety of sources of supporting evidence.

Here are some links to external commentary should you like to look into this further.

https://www.ato.gov.au/Super/Self-managed-super-funds/In-detail/SMSF-resources/Valuation-guidelines-for-self-managed-super-funds/

https://smsmagazine.com.au/news/2020/10/21/evidence-key-to-reporting-property-valuations/

https://www.smsfadviser.com/news/20274-smsfs-warned-on-increasing-compliance-risks-affecting-property-valuations