Fact: If you have a self-managed super fund and have used it to purchase property, you’ll need regular property valuation updates.
The end of the financial year is a busy time for everyone, particularly if you have a self-managed super fund (SMSF). Mandatory yearly audits are required for SMSF managers to ensure compliance with SMSF rules and Australian Tax Office (ATO) guidelines.
If you’ve purchased property with your SMSF, you may you be required to schedule regular independent valuations of the property from a qualified valuer for your annual financial statements.
Let’s help you understand your obligations.
A qualified valuer will provide you with an independent valuation of your property’s market value. Picture: realestate.com.au
When is a property valuation required for a SMSF financial statement?
Every year SMSF owners and managers are required to prepare financial statements. For people who own a property within a SMSF, this will need to include the current market value of the property as at a certain date. A property valuation provides objective and supportable data that can be used by the auditor of the SMSF to sign off on the financial statements.
The market value by an independent valuer is determined in accordance with the International Valuation Standards and API (Australian Property Institute) Standards. This means the valuer is qualified, experienced and certified to provide a market value of your property.
A full valuation requires the valuer to undertake a comprehensive internal and external inspection. Picture: Caroline McCreddie
How often do you need a property valuation for a SMSF?
Superannuation advisors recommend a full valuation for property every three years. However, as annual value updates are required for the two years in between, you can seek an assessment to determine the property’s value. The valuer will understand what type of valuation you will need based on the information that you provide them about the property, including property type, and the date of the most recent valuation.
You may need more regular advice from a valuer if you have more than one property in your SMSF and it represents a significant proportion of your SMSF. Or, if the property in your SMSF is complex, it could be a mixture of residential or commercial, retail or industrial, this is when a valuer can provide a more detailed analysis.
What if my situation changes?
There are going to be times when your personal situation may change, for example you may retire and commence a pension, this life change can impact your SMSF. SMSF advisors can help you understand if you need to get your property valued for any reporting purposes.
An independent property valuation can help you be compliant with SMSF rules and tax office guidelines.
Circumstances when the value of your property may change
You may have completed a renovation, or there may be a shift in the property market in your local area, or an event has occurred which may impact the value of the property such as a natural disaster.
Circumstances such as these may require an independent property valuation.
How to prepare for a property valuation
Ensuring your home is tidy and looking its best will make the valuer’s job easier. Picture: Caroline McCreddie
Preparing for a valuation is a simple, but by no means an unimportant step.
- Tidy up, declutter, finish repairs, and finalise any renovations. While a valuer can see past a little dust, a well-presented property is easier to assess, and gives your property the best possible chance of a higher valuation result.
- Advise the valuer if you have completed any renovations to the property.
- If you have them, provide the valuer a copy of the building plans.
With these preparations complete, you’ll be on track to receiving the most accurate valuation for your property.
Disclaimer: Opteon Valuers do not provide accounting, specialist tax or financial advice. They are qualified, experienced and certified to provide market value valuations of your property.
