Property valuations for both residential and commercial properties are required every year.
For most residential properties, Grow can generate an automated valuation from RP Data. This is included in our annual SMSF accounting fees.
For commercial property, you will need to obtain an annual valuation with comparable sales data to verify its valuation.
Notes:
Real estate agent appraisals/valuations must include details of comparable sales.
Automated service is based on data on sales and is generally an estimated value. Check that the comparable sales are of similar properties and that the confidence level is high or medium-high, equating to an FSD (“Forecast Standard Deviation”) / range of less than 10%.
A Desktop Valuation uses automated valuation data and the Property Valuer’s data and expertise. It is completed remotely without physically inspecting the property. Valuing commercial property is more complex than valuing residential property, so care must be taken when relying on Desktop Valuations for commercial property.
Evidence must be provided. This could include a sales history of comparable properties from online providers such as realestate.com.au, domain.com.au, etc. A minimum of 3 comparable sales is required. Take care when using comparable sales for commercial property, as this area can be complex.
Council rate values are insufficient audit evidence for rural and commercial properties. Council rate values may be relied upon for residential properties; however, further evidence from one of the above valuation methods must also be provided.
Annual Valuations Required
The valuation of the fund’s property must be reviewed and updated in the fund’s financial statements annually, with evidence provided to support the valuation for the auditor.
This doesn't mean the SMSF has to pay for a professional valuation report each year.
A new professional valuation should be obtained at least every three years, but alternative supporting evidence and calculations can be used for the years between the professional valuations.
Where an independent valuation has been previously obtained, as an SMSF trustee, you can provide updated annual evidence that takes into consideration the following:
Net capitalisation method
Where an independent valuation obtained in a prior year was based on a rent calculation against an appropriate yield, consider whether an updated market valuation can be determined by recalculating the increased annual rent divided by the yield (from the last independent valuation).
Comparable sales method
Consider if there have been recent comparable sales for similar properties in the area since the last independent valuation, and, based on that updated information, recalculate the market valuation.
Improvements
An updated independent valuation will be required if the property has been materially renovated or redeveloped since the last valuation.
Obtaining a Professional Valuation Report
Numerous professional valuation services can provide valuation reports for SMSF trustees.
Prices typically range from $349 to $1,100, depending on the type and location of the property. This fee is paid by your SMSF.
Grow SMSF has linked with Duo Tax to provide both depreciation schedules and professional valuations:
You can also request a valuation for your commercial property via Superfund Property Valuations:
If you have any questions about what is required for your property valuation, please get in touch with us.