In order to reflect accurate member balances for the year ended 30 June 2021, SMSF that hold property need to obtain a market valuation. Generally an external valuation of real property is not required each year. However, a recent valuation would be deemed necessary if you expect the valuation is now materially inaccurate or an event occurred that may have affected the value of the property since it was last valued. This may be due to a change in market conditions or a natural disaster.
Given the COVID-19 pandemic is still impacting Australia a new valuation will be required for the year ended 30 June 2021. The trustees would be required to provide support for the property valuation and meet the ATO requirements.
When valuing real property relevant factors and considerations may include:
- The value of similar properties
- The amount that was paid for the property in an arm’s length market
- Independent appraisals
- Whether the property has undergone improvements since it was last valued
- For commercial properties, net income yields
Business real property acquired from a related party of the SMSF must be made at market value. Disposals of real property to a related party of the SMSF must be conducted at arm’s length.
Business Real property rented to a related party, the rent charged must be at market rates.