Every June the same question turns up from trustees and their accountants: do we need the property valued again this year? The honest answer is that the rules ask less than most people assume, and more than a few funds deliver.
Your fund has to report the property at market value in its accounts each year. That part is non-negotiable. Paying a valuer every year isn’t. What the ATO cares about is whether the figure on 30 June rests on objective evidence, and its Guide to valuing SMSF assets sets out what counts.
Most assets in a fund are easy to value however; property is one of the harder assets to value. There’s no published price for a townhouse, and the market can move a long way between valuations. It’s also usually the biggest asset in the fund, which is why auditors give it more attention than anything else.
If you’re unsure what your own fund needs this year, that’s a question for your accountant or SMSF adviser.
What follows is how the rules actually operate for SMSF Property Valuations.
What the ATO expects from SMSF Property valuations each year
Every self-managed super fund (SMSF) reports its assets at market value when the annual accounts are prepared, and it has been that way since the 2012–13 income year. The ATO’s guidance for fund auditors doesn’t leave much room to argue with it.
Market value means roughly what you’d expect. It’s the price a willing buyer would pay a willing seller for the property after proper marketing, with neither side under pressure or doing a mate a favour.
It isn’t the council rates notice. And it isn’t what the fund paid for the place back in 2019.
The number matters because it flows into almost everything else the fund does. Members’ super balances at 30 June, minimum pension payments for anyone drawing an income from the fund, and several of the fund’s compliance tests all hang off it. Get the property figure wrong and the errors ripple through the rest of the report.
One thing to be clear on early: valuing the assets is the trustee’s job, not the auditors. Trustees settle on the number and hold the evidence behind it. Come audit time, the auditor’s role is to test whether that evidence stands up.
Does an SMSF need a formal property valuation every year?
No. According to the ATO’s Guide to valuing SMSF assets, an external valuation doesn’t need to be performed for every asset each year.
What trustees must be able to show is that the value in the accounts came from a fair and reasonable process. In the ATO’s terms, that means a value based on objective and supportable data, arrived at in good faith through a rational and logical process, taking in everything likely to affect the asset’s value, and capable of being explained to a third party.
The ATO also covers funds that do get independent valuations. You don’t need a fresh report from the valuer every year. You DO need to look at the old one each year and decide, and document, whether it can still be relied on. Once the market has moved or the figure no longer looks accurate, the ATO’s position is that you can’t keep leaning on it.
In plain terms, the yearly obligation is about the number in the accounts and the evidence behind it, not about commissioning a report on a set schedule. What that means for your fund this year is a conversation for your accountant or SMSF adviser.
How often does an SMSF need to value its property?
You’ll often hear a rule of thumb that SMSF property should be professionally valued every three years. It sounds sensible. It’s also not in the rules. There’s no three-year cycle anywhere in the ATO’s guidance, and a three-year-old report sitting in a drawer, with nothing current to support it, can leave a fund exposed at audit time.
For example, a fund bought a unit in 2022 and got a full valuation at purchase. By 2025 the suburb market value has shifted, and the house has been renovated, yet the accounts still show the 2022 figure. That’s the sort of file the ATO’s guidance has in mind.
The guidance itself is more useful than any fixed cycle. The ATO says an external valuation of an asset like real property may be prudent, its word, when the previous valuation looks materially inaccurate or a significant event has happened since. It lists examples: natural disasters, market volatility, economic shocks, or changes to the property itself, such as a renovation, damage or rezoning.
Some situations call for a market value no matter what. Assets supporting a new pension have to be valued on the day the pension starts. And the 30 June accounts need a value every year regardless.
Where an asset makes up a large share of the fund’s value, or is genuinely hard to value, the ATO recommends considering a qualified independent valuer.
What will the auditor ask for?
Every SMSF is audited once a year by an approved SMSF auditor, a professional registered with ASIC to audit self-managed funds. The auditor doesn’t value the property. Their job is to check whether the value you’ve reported is accurate, and they need solid evidence for every asset before they can sign off. Where the evidence isn’t sufficient, the auditor may qualify the audit and, where the reporting rules require it, notify the ATO.
This part of the audit has teeth. SMSF property valuations are a stated ATO focus area, and in a recent newsroom update on market valuations the ATO reported that breaches of the market value rule now make up more than 12% of all breaches auditors report to it. In the same update it confirmed it keeps compliance scrutiny on funds carrying the same asset values year after year. A number that never moves is exactly the pattern that attracts attention.
For property, the ATO expects a mix of evidence rather than a single document. Acceptable sources include an independent SMSF property valuation, recent comparable sales in the area, a market appraisal from an independent real estate agent, or, shortly after purchase, the price the fund paid, provided nothing material has changed since.
One item on its own generally won’t cut it. And if an agent appraisal or online estimate is doing the heavy lifting, the ATO expects it to list the comparable sales behind it. A one-line letter saying what the place is worth won’t satisfy anyone; the same appraisal listing four recent sales nearby is a different story. Even an older independent valuation needs current data sitting alongside it to support this year’s figure.
An independent valuation from a Certified Practising Valuer is one of the clearest pieces of evidence a trustee can put in front of an auditor, which is why many trustees choose one for property. It won’t take the yearly thinking off your plate, but it can make audit time a lot simpler.
Here’s how the common triggers and the evidence expected line up.
| Situation | Evidence commonly expected |
|---|---|
| Preparing the fund’s annual accounts | Objective and supportable evidence of market value: an independent valuation, comparable sales data, or an agent appraisal backed by data |
| The previous valuation looks out of date or inaccurate | A new valuation, or updated evidence supporting the current value |
| A significant event since the last valuation (renovation, damage, rezoning, a sharp market movement) | A valuation or evidence obtained after the event |
| A member starting a pension | Market value of the supporting assets determined at the start day |
| Property making up a large share of the fund, or hard to value | The ATO recommends considering a qualified independent valuer |
| Relying on an older independent valuation | Current supporting data alongside the original report |
Does a valuation change the fund’s depreciation claim?
No, the two run separately. The market value in the fund’s accounts is one thing. The depreciation the fund claims on the property is another, and a revaluation doesn’t reset or replace those claims. An SMSF holding an investment property can generally claim deductions for the building and for eligible fixtures and fittings in its annual return, subject to the usual eligibility rules. Our guide to Division 40 vs Division 43 explains how the two categories work. How the deductions apply to your fund’s return is one for your accountant.
The short version
- Every SMSF must report its assets, property included, at market value in the accounts each year.
- An updated valuation may be prudent after a significant event, and many trustees choose one for property because it’s the fund’s hardest asset to evidence.
- If you’re unsure where your fund stands, speak with your accountant or SMSF adviser.
Where to from here
The rule itself is simple: a market value in the accounts every year, backed by independent evidence someone outside the fund could follow. Whether last year’s evidence still holds, and whether it’s time for an updated valuation, are questions to work through with your accountant or SMSF adviser.
If an independent valuation would assist with your fund’s annual reporting or audit, TDA prepares SMSF property valuations through Certified Practising Valuers. You can read about the service at or call us on
TDA prepares property valuations and tax depreciation schedules. TDA does not provide tax, financial or investment advice.
