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The best tax deduction within your Self Managed Superannuation Fund is…

As the financial year is coming to a close, we remind our client base of the Self Managed Superannuation Fund (SMSF) requirements in relation to the valuation of real estate property assets.

Simply, trustees must provide a Property Valuation Report undertaken by a Certified Practising Valuer at least once every three years, or trustee annually.

It is important to note that the fund’s assets are to be valued at current market value, with regard to Regulation 8.026/b of the Superannuation Industry Regulations 1994 providing direction.

The essence of a formal valuation has never been as important as this year, with a myriad of factors that must be taken into account within the assessment of “market value” to any class of real estate held within a SMSF.

The assessment of value

The assessment of value is to include the accepted definition of “market value” being -:

“The estimated amount for which as asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing where in the parties had each acted knowledgeably, prudently and without compulsion”.

Further, the report is to include directly comparable sales evidence.

Factors to be considered within the assessment of value include:

  • Covid 19 period and “Global Pandemic”
  • State of Disaster
  • Post Covid 19 – 2021 and 2022
  • National Cabinet Code of Conduct – Commercial Relief
  • General economic uncertainty
  • Vacancy rates
  • Net / effective rentals
  • State elections and resultant Federal Election
  • Inflation
  • And rising interest rates

just to name a few.

I strongly recommend that you obtain a professional Certified Practising Valuer to alleviate the stress of providing the Australian Taxation Office with an incorrect level of value.

The time is right to seek advice with the benefit of a tax deduction.

The writer is a Specialist Retail Valuer, Fellow of the Australian Property Institute, Licensed Real Estate Agent and Associate of the Royal Institute of Chartered Surveyors.