Many renovators don’t realise their choices of fixtures, fittings and materials will ultimately affect the size of their annual tax return. Instead of trying to save money by tackling DIY work, there are smarter ways to increase your result without additional hard labour.
If you're thinking of renovating your investment property, make sure you get the most out of your hard toil.
Mike Mortlock, the Managing Director of our Strategic Partner, MCG Quantity Surveyors, has provided some simple choices that can boost your bank balance without any extra work.
Tip #1: Kitchens
Choosing to spend more in the cooking area will improve your tax outcome. Kitchen renovations attract high depreciation rates because of the sheer quantity of assets defined as plant and equipment items – the very things that depreciate fastest under the ATO (Australian Taxation Office) guidelines.
Tip #2: Carpet Not Tile
Some floor finishes have greater tax advantages than others. Our tip for getting dollars back is to pick floating timber or carpet, rather than tile or polished concrete. In the eyes of the ATO, carpet has a 10-year effective life and floating timber has a 15-year horizon, while tile and concrete are both classified as lasting 40 years.
Tip #3: Small Fixtures
Individual plant items with an opening value under $301 provide an instant deduction on your tax return. If, for example, you’re considering cost-effective approaches to cooling rooms, ceiling fans could be the way to go. If you have one installed for $300 or less, you’ll get a $300 deduction right away.
Tip#4: Outdoor Areas
Upgrading outdoor spaces provides the perfect opportunity to increase your tax return. You might consider making your rental more inviting by including a few little outdoor extras that provide great advantages for maximising rebates. External fridges and barbecues, for example, help improve rental appeal while also providing excellent short-term tax deductions.
Tip #5: Windows
One of the most cost-effective ways to boost a property’s value and take advantage of depreciation is to include window coverings. They help with temperature control and filtering light, while also completing the property's fresh, new look - and they're a terrific tax deduction too.
Like To Learn More?
For more information on getting the most for your renovations, please contact Marty Sadlier, Director of MCG Quantity Surveyors on 0425 392 806