The general rule of thumb used by the majority of SMSF auditors is that property investments held by a SMSF must be valued at least every three years.
There are three main reasons why SMSF trustees need to revalue any real estate investments held by their fund on a more frequent basis:
- Pensions – when a SMSF commences a pension, the value of the underlying investments that support that pension need to be determined to accurately calculate the minimum and maximum pension amounts.
- Performance – it is essential for SMSF members and trustees to be able to measure the performance of their investments – which needs to include any change in the valuation of real property.
- In-house Assets – SMSFs are limited to having 5% of their assets invested into ‘in-house’ assets. For this ratio to be accurately measured, all investments of the fund must be valued at fair market value.