Valuations maybe required on assets owned by your Superfund as a tax strategy or to comply with required Australian Taxation Office (ATO) reporting obligations.
We can provide the required valuations for assets including Residential, Commercial, Industrial and Retail.
Valuations should be performed annually for financial reporting purposes.
SMSF Property Valuations
As of July 1, 2019, self-managed superannuation funds (SMSFs) are required to obtain a market valuation of their property holdings at least once every three years. The purpose of this requirement is to ensure that SMSFs are complying with the "sole purpose test" under the Superannuation Industry (Supervision) Act 1993 (Cth), which stipulates that an SMSF must be maintained for the sole purpose of providing retirement benefits for its members.
There are several ways in which an SMSF valuation of property holdings can be obtained, including engaging a registered valuer. Once obtained, the valuation must be lodged with the Australian Taxation Office (ATO) within 21 days.
SMSF Property Valuation ATO Requirements
The ATO has published guidance on what it expects from SMSF property valuations, which includes that the valuation must:
Be prepared by a suitably qualified and experienced professional;
Be independently and impartially conducted;
Be free from bias; and
Be based on relevant market data.
If an SMSF fails to meet SMSF property valuation requirements (ATO specified), it may be subject to penalties from the ATO.
SMSF Property Valuation Frequency ATO
An ATO SMSF property valuation is an important part of owning an SMSF property in Australia. When it comes to an ATO property valuation, SMSF trustees are legally required to value their fund's assets at least once every three years. SMSF property valuation every 3 years (ATO) is important in ensuring that the SMSF's tax liability is accurate and that the asset is not being improperly valued for superannuation purposes.
However, many professionals recommend that trustees should carry out valuations more frequently than this, particularly if the asset is subject to significant price fluctuation. For example, if a property is held in an SMSF and the market value of the property increases or decreases by more than 10%, it may be advisable to have the property re-valued. While it is ultimately up to the trustee to decide how often to have their fund's assets valued, it is important to keep in mind the legal requirements and professional recommendations when making this decision.
SMSF Rental Property Valuation
Every three years, the ATO requires Self-Managed Super Funds (SMSFs) to have their rental properties valued for audit purposes. The value of the SMSF residential property as of the date of the valuation will generally be used for tax and super purposes for that financial year and the next two financial years. Several factors must be taken into account when determining the value of a rental property, including its location, age, condition and rental income. An experienced valuer will be able to provide an accurate SMSF valuation of real property.
Commercial Property SMSF
Commercial property SMSF valuations are critical for Self-Managed Super Funds (SMSFs) due to the restrictions placed on holding debt and the high costs associated with buying and selling properties.
There are many different ways to value an SMSF commercial property in Australia, including the Capitalisation Rate (CAP) method, the Income Approach and the Direct Comparison Approach.
The most commonly used method is the Capitalisation Rate (CAP) method, which takes into account the net income of the property, the market value of the property and the expected rate of return on investment. The CAP method is generally considered to be the most accurate way to value commercial properties.
McLean Gladstone provides a range of superannuation valuation services, including SMSF property valuation. To request a quote, please enter your details below, along with the subject property's address. Alternatively, please feel free to telephone for a quote.
To request a quote, please enter your details below, along with the subject property's address. Alternatively, please feel free to telephone for a quote.