As we are now in the new financial year and ready to prepare financial accounts and income tax returns for the 2021/22 year, it is a timely reminder that a market appraisal of the property asset(s) held inside your superannuation fund and/or indirectly inside your related property trust should be updated for the purposes of preparing your fund's financial accounts for the year.
As previously advised, all trustees of self-managed superannuation funds are required to seek market appraisal of properties for financial reporting purposes. This is to ensure that all SMSF members are provided with more accurate financial information about the true financial position of the fund and therefore, their benefit entitlements.
The rules around valuation of assets held by SMSFs have become tighter in recent years. For example, in the past, trustees would normally ask a real estate agent to provide a kerbside valuation and use that same valuation for the next few years. Nowadays, an SMSF auditor would expect to see either a formal valuation report or something less formal but supported by additional evidence such as information about comparable sales in the area where the property is located. For commercial properties, information about the rental income yield that supports the valuation is generally sufficient
We seek your assistance in obtaining an updated market appraisal/valuation of your property asset(s) held inside your fund and/or related property trust.
Please note – council rates notices are not enough to rely on. More often than not, they do not show a true reflection of the market value of a property. Remember, it comes back to "what a willing buyer could reasonably expect to pay a willing seller of an asset".