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Is it compulsory to request lease agreements if the investment property is managed by an agent
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Hi Signorina
If you are satisfied that the rental has been done on an arm's length basis then there would be no need to obtain a rental valuation. You may be able to compare the rent being received to similar properties advertised in the area and that may give you confidence that market rental is being received.
Thanks
SMSF AAA
Hi Signorina
It is not compulsory to request a lease agreement when a property is managed by an agent. From an audit perspective arguably there is less risk if a property is managed by an estate agent as that would normally indicate the tenant is not a related party.
It is preferable to request the lease agreement to confirm the rent to be paid and to determine which expenses are payable by the tenant & which are payable by the landlord (the Fund). Also arguably section 109 of SIS the arm's length requirement would require the auditor to sight the lease agreement to ensure the lease has been arranged on an arm's length / commercial basis. The lease agreement will also state who the tenant is so the related party rules can be audited if the property is residential.
Thanks
SMSF AAA