Is your accountant preparing your SMSF property valuation using a real estate appraisal or a figure they have calculated internally? If so, your fund could be at risk of failing an audit, and the fix is simpler than you might think.
The Australian Taxation Office requires that property held within a Self Managed Super Fund be valued at market value each year, using an approach that is objective and, where possible, based on evidence from a qualified independent source. In practice, this means an accountant estimating a figure from memory, or relying on a real estate agent’s appraisal, is unlikely to satisfy an auditor. This is precisely the gap that independent valuers like City Valuers Australia are engaged to fill for trustees right across the country.
Accountants play a vital role in preparing SMSF financial statements and tax returns, but they are not property valuation specialists, and the ATO does not expect them to be. Australian Taxation Office guidance makes it clear that valuations should be based on objective and supportable data, and while an accountant can accept a valuation and use it in the fund’s accounts, they are not the appropriate party to determine that figure in the first place.
When an SMSF auditor reviews the fund each year, they are specifically checking whether the valuation used is reasonable and appropriately supported. A number pulled together internally, without independent evidence, is one of the most common reasons an auditor will raise a qualification or ask further questions. This can delay the audit, increase costs, and in more serious cases draw the attention of the regulator.
The ATO does not mandate a valuation by a Certified Practising Valuer every single year for every property, but it does expect that the valuation is based on objective, verifiable, and up to date evidence relevant to the current market. For property, this generally means considering recent comparable sales, the condition of the asset, and any factors that may have changed since the last valuation.
Certain events make an independent valuation from a qualified valuer essential rather than optional. These include when the fund is acquiring or disposing of a related party asset, when the property is used to support a limited recourse borrowing arrangement, when a member is starting a pension and needs an accurate asset value, or when there is any doubt about the property’s current value. In these situations, a desktop estimate or agent appraisal is not considered sufficient evidence.
If an SMSF holds a property at an incorrect value, it can distort the fund’s total balance, which in turn affects contribution caps, pension calculations, and compliance with the sole purpose test. An overstated or understated valuation can also create problems if the fund later needs to sell the asset, transfer it, or wind up the fund altogether. Auditors are required to flag valuations they consider unreliable, and repeated issues can eventually result in the fund being reported to the regulator.
Beyond compliance, trustees also have a duty to ensure the fund’s assets are managed appropriately, and that starts with knowing what those assets are genuinely worth. Guessing, or relying on outdated figures, does not meet that standard.
An independent valuation prepared by a Certified Practising Valuer provides the objective evidence that auditors, accountants, and the ATO expect to see. It removes any question of bias, since the valuer has no financial interest in the outcome, and it gives trustees a defensible position if the valuation is ever challenged or reviewed.
City Valuers Australia regularly prepares SMSF property valuations for trustees, accountants, and financial advisers across Brisbane, Sydney, Canberra, Gold Coast, Parramatta, Penrith, Toowoomba, Ipswich, and Cairns. Reports are prepared with SMSF compliance requirements in mind, giving trustees and their advisers confidence that the figure used in the fund’s accounts will stand up to scrutiny.
If your SMSF holds property and you are not entirely sure the current valuation would satisfy an auditor, it is worth addressing sooner rather than later. This is particularly true if the fund is approaching a pension phase, considering a related party transaction, or has not had an independent valuation in several years.
Speak to your accountant about whether an independent valuation is needed, and consider engaging City Valuers Australia to prepare a report that meets ATO expectations and gives your fund the certainty it needs. A proactive approach now can save considerable time, cost, and stress at audit time later.
There is no single fixed rule for how often a property held in an SMSF needs a fresh independent valuation, but most accountants and auditors recommend a formal valuation from a qualified valuer at least every three years, with a more frequent review if the fund is approaching a pension phase or if market conditions have shifted significantly. Between formal valuations, trustees can update the figure using recent sales evidence, but any time a related party transaction, borrowing arrangement, or pension event is involved, a fresh independent report should be obtained rather than relying on an old figure.
None of this is about replacing the role your accountant plays. A good working relationship between trustees, accountants, and an independent valuer is exactly how a fund stays compliant year after year. City Valuers Australia regularly works alongside accountants and financial advisers, providing the objective evidence they need to finalise the fund’s accounts with confidence, while leaving the accounting and compliance advice to the professionals best placed to give it.
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