An SMSF auditor has confirmed trustees who invest in properties offering short-stay accommodation still must supply documentation detailing the tenants who rented the asset in the absence of a conventional lease, which would not be applicable in the circumstances.
Seamless SMSF specialist auditor and adviser Frank La Spada noted there are a number of options available to trustees to verify who rented the property in question to ensure the fund complied with all of the rules applying to residential properties held within a fund.
“[If] the client is renting [out] the property off Stayz or Booking.com or one of those main websites, there would be some type of report that can be provided that clearly shows a list of all the parties who have rented the property throughout the year. That’s the main third-party document the client is actually going to be able to provide us,” La Spada told attendees of a technical webinar hosted by Accurium yesterday.
“The other thing we would generally do is have some type of declaration, signed by the client, that states the property wasn’t used by any related parties. [Further], all the other forms of review we aren’t able to check off on can be documented in a clear minute signed by the trustees.”
In addition, he revealed Seamless SMSF covers the situation in its representation letter, which serves to make the client aware of the risks associated with a short-stay real estate asset.
According to La Spada, there is a chance holding this type of property will lead to the SMSF auditor qualifying Part A of the audit report.
Accurium senior SMSF educator Anthony Cullen suggested documentation related to short-stay accommodation is extremely important as these properties are often located in holiday destinations and keeping proper records will dispel any perception the trustees may have used the asset for their own convenience.
