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How often we need to get valuation of real estate held in SMSF? An external valuer may cost a lot. So the trustees always give us their own valuation. How to finalise the market value of commercial / residential properties in Australia? How important this for an auditor?
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Hi Noble
The ATO guidelines on valuations do not refer to a 3 year concept re valuations and property which has often been raised by trustees / auditors. The valuation of the property should be reviewed by the auditor on an annual basis. Preferably every year the Trustees advise how they have calculated the value at year end of the Fund's property investment and sign a resolution to this effect.
The ATO guidelines state re valuations and property are found at:
These guidelines can assist the auditor & they advise:
• An external valuation is not required each year.
• Valuation is fair & reasonable if:
• Takes into account relevant factors & considerations re its value
• Undertaken in good faith
• Rational and reasoned process
• Capable of explanation to a third party
• Valuation may consider:
• Value of similar properties
• Value paid for property in an arm’s length market
• Independent appraisals
• Has property value been improved since last valuation
• For commercial properties net income yields can be used
• Online services
• Real estate agent valuation is acceptable
Getting valuations are very important as property investments typically make up a large % of a Fund's assets.
An external valuation would be appropriate if the property is difficult to value based on the above guidelines.
Thanks
SMSF AAA