How do you attribute value to real property? And is this value consistent for all purposes, such as both claiming CGT relief as well as accumulating towards Total Super Balances?
Valuation Methodology
Independent professional valuations are the best evidence to support the value attributed to an SMSF’s investment in real property. Trustees can also rely on real estate agent valuations, comparable sales data and property valuation website data or rates notices as objective data to form an independent valuation.
Importantly the valuation needs to be “reasonable” and trustees need evidence to support the assumptions and methods underlying the valuation method if they have chosen methods other than an independent professional valuation. Trustees also need to use comparable sales data that relate to properties in the same location with similar features. Consideration must be given to whether the attributed value is improved or unimproved from the value on the rates notice.
Range
Value can be attributed within a stipulated range that is fair and reasonable and based on objective and verifiable data. However, it is not acceptable to use a value at the lower end of the range for one purpose and at the other end of the range for another purpose.
Consistency
There must be consistency in values used for different purposes. So, a value used for transactional CGT relief purposes will also then apply to calculations of Total Super Balances.
For more information on independence in valuation and an expert opinion, please contact us.
The Saul SMSF Team
1300 551 261
saulsmsf.com.au
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