Keeping a property in excellent condition, replacing the dishwashers, ovens, air conditioner, and so on and so forth, are aspects both tenants and landlords could benefit from and ensure investors earn more. Find out a range of basic strategies that savvy investors embrace in order to boost their earnings.
It goes without saying that a satisfied occupant is less likely to leave. At the same time, the majority of property investors don’t recognise the immense benefits they could get by just maintaining the property in perfect condition. In this direction, did you know that, as a landlord, you have the right to claim tax deductions by replacing old items with new ones?
How Can Investors Earn More?
It’s highly recommended
Specialists in this realm explained to us that investors have the possibility to claim tax deductions for the diminishing value of the household items. Bradley Beer, BMT Tax Depreciation CEO, clarified some aspects about this discussion.
In other words, you can only throw away the old piece, and, apart from the deduction for the new item, note that the residual value of the previous item should include a deduction of 100 percent, in the year you’ve discarded the item.
You can find out the exact values attributed to each kind of article from a tax depreciation schedule, which costs between $600 and $800.
Investors should take into account that these rules aren’t applicable to individual items alone, but to other rooms, including the kitchen. For instance, Bradley Beer said that an investor who reconditions a kitchen that is 20 years old should take into account that the life of a kitchen is estimated at 40 years. In this scenario, you may obtain half of the entire value of the kitchen.
It’s vital to get acquainted with the numbers in the depreciation schedule before taking the leap.
It’s important to have a written report because it provides the investor with factual proof, in the case in which the Tax Office wants to audit them in the foreseeable future.
Beer also added that around 80 percent of Australia’s total property investors don’t maximise the rights they have when it comes to depreciation deductions.
A win-win situation for investors and tenants
Peter Koulizos, real estate investor, author, and university lecturer said that bathroom and kitchen upgrades are probably the modifications that could be translated into a significant boost in rent. That’s mainly because the kitchen and bathroom account for factors that imminently determine the amount of the rent, apart from the number and size of the bedrooms.
The bottom-line is that, by upgrading the living space, investors can have happier tenants, an increased rent, and unbelievable tax deductions.
Nonetheless, it is highly recommended for investors to consider doing a benefit-cost evaluation to ensure that their investment will pay off.