Upgrading your investment property via a renovation will; increase your property value, has added tax benefits, reduce maintenance costs and will attract quality tenants.
$ Return on Investment
Your financial return from your investment property is why you’re an investor so, to increase your return on your property via a renovation will expedite your growth. After a renovation you can expect an increase of value within in a year and an Increased Rental Yield – increasing your weekly rent.
Renovating your property drastically reduces the amount of maintenance requests you will eventually pay for and leaves you with long term satisfied tenants. “Set & Forget”!
Upgrading your investment property attracts quality tenants.
Investors invest to make money and to save money on tax. Tax depreciation on items in your investment property will help to keep money in your wallet or save for your next investment property.
After completion of the renovation it is advised that you engage a Quantity Surveyor in which your scope of items/works are used to compile a “Depreciation Schedule” which allows you to claim depreciation on materials and labour. All components have a different life span of depreciation depending on whether it is structural or a removable item.
Capital works -Structural works e.g. Kitchen etc. can have up to 40 years.
Plant & Equipment – Removable items e.g. an oven has 12 years.
A schedule of all items works/ items are detailed in your depreciation schedule from the surveyor, which is then handed over to your accountant.
When your renovation is completed as the fittings, fixtures and – they depreciate. The Australian Tax Office allows anyone who is making an income from their property to depreciate it.
*If your property was built after 1987 you can depreciate the building costs at 2.5% per year for 40 years (capital gains tax will apply once you sell this property) NOTE: This is subject to change.