Valuation for SMSF

Hi All, I need a valuation completed for a 2 bed apartment which is under a SMSF for annual reporting, I think the unit is worth around $1 million. Does anyone know how much the report would cost if I get a valuer? Does anyone get this done on a regular basis? How long does it take to complete?

 

The unit will need to be valued. However the current law does not say how the valuation should take place.

The smsf trustees can do their own valuation based on market evidence and some RE agent appraisals.

BOOM - no cost.

You only now have to sell it to your auditor.

 

Thanks Ross! A couple of other questions - Does the property need to be valued each year? And what happens when there's an increase or decrease in value on paper? Do I get a tax claim on the loss or have to pay tax on the increase?

Also, I was thinking or getting a depreciation schedule completed by a quantity surveyor for a deduction, do you know how much that would be? Or can I get an accountant to do it?

cheers!

 

Yes

Nothing

No

No but ask @BMT Tax Depreciation and they will let you know.

You cannot get an accountant to do the report (generally).

 

Don't forget that negative gearing is against a 15% tax rate which means it is not as powerful as outside super with a much higher tax bracket. A different matter if you make more than $250/year in which case the tax rate for super goes to 30%(I believe)

 

@Ross Forrester - I thought it only needed to be valued every 2 years...... Did that rule change, or was I wrong all along?

 

Just found this on the ATO site:

We expect you to know the value of the assets in your fund. This does not mean that an external valuation needs to be performed for all assets each year. However, an external valuation of an asset such as real property may be prudent if you expect the valuation is now materially inaccurate or a significant event has occurred since it was last valued.

Valuation guidelines for self-managed super funds

 

thanks everyone for your advice!

 

Sis Regs - extract of law

8.02B Asset must be valued at market value

For subsection 35B (2) of the Act, for the year of income 2012–13 and any later year of income, when preparing accounts and statements required by subsection 35B (1) of the Act, an asset must be valued at its market value.

 

The above is all excluding some situations with SMSF like entering into a new pension and rolling in and rolling out of pensions.

Then my answers would probably take around 15 pages and a face to face meeting.

I love those little disclaimers at the bottom of my signature.

 

It is sufficient to ask you property managing agent to provide an appraisal as at 30th of June each year. These are then for free.
I am still in accumulation phase and have been doing this for my accountant's auditors every financial year, but I would presume similar would apply if you are in pension phase (unless you were re-setting your cost base for CGT for the changes that just occurred to Super?). If the agents' use a range you just must be consistent to use the same figure when selling.
My private IPOs are harder to appraise but I ask for these letters each year.

 

T

Thanks, @Ross Forrester - looks like I need to ask for that valuation...........

 

Sharpy - if you are in pension phase, you will need an independent appraisal each year. If you are in accumulation phase - generally speaking, a valuation should take place every three years - unless there has been a material movement (i.e mining town). I generally accept an appraisal from a local agent on letterhead - signed and dated of course.

Cheers Ivan

 

Just double confirming - the SMSF trustees are obliged to value the asset yearly.

Their is no obligation for that valuation to be independent - it can be your own valuation.

Some people have a policy of demanding that an indepedent appraisal is needed - but the law does not indicate the need for a independent valuation - just a valuation which can be done by the trustees. As a guide it is considered "best practice" for a RE appraisal yearly and a valuation every three years - but that is a guide.

A significant point in time the valuation can make an impact is on 1 July 17 when the valuation potentially changed the cost base for some SMSF asset. In that instance better evidence of the valuation is recommended (by our firm - but not mandatory).

 

This is a fact not an opinion that I have stated, I have been doing this since the ATO required it, hence no need for formal valuation for IPs and it needs to be done every year...

 

While doing some general 'update my knowledge of SMSF requirements' reading, I found this on the ATO website:

 

Sales appraisal by real estate agent has been keeping the auditors happy.

 

I know I can do my own valuation but I've come across a valuation company called PPV Australia (https://ppvaustralia.com.au) and they have an interesting membership type thing where they provide valuations for your SMSF/investment property, and also land valuations to look at your rates/land tax each year.

Has anyone used this company? What do you think?

It may be worthwhile having a valuer look at the land value each year (just so I know I'm not getting ripped off) plus I also get the added benefit of having the professional value the IP.

 

A formal valuation isnt needed for a SMSF and def not needed for a IP other than if a dev is occurring. I would think its unnecessary.

Ask two valuers and they will differ. Paying for a val doesnt = profit or income

 

any idea how much this costs?