The holidays, according to a leading expert, are a great time for property managers to come up with suggestions they can offer to investors on boosting their investment property’s appeal for tenants while increasing their tax deductions at the same time.
BMT Tax Depreciation said that because many tenants go away at this time of year, it can be a good time to make strategic improvements to investment properties.
“Upgrading a property will not only improve the aesthetics and liveability of a property, it can also help to unlock lucrative tax deductions,” CEO Bradley Beer said.
According to Mr Beer, one area where landlords could invest well is in the yard and outdoor entertaining spaces.
“Backyards are often in need of extra attention at this time of year as they are areas where people spend a lot of time,” Mr Beer said.
“It’s a good time to check whether the deck needs to be oiled, to remove leaves from the eaves, to ensure fences are secure and to remove and replace any retaining walls that could be experienc[ing] wear and tear.”
Mr Beer said that new life can be breathed into entertaining areas with a new barbeque or outdoor furniture.
But he also warned PMs to keep investors aware of the series of “intricate” rules involved in repair and maintenance work.
“The Australian Taxation Office (ATO) provides clear definitions of what work is classified as repairs and maintenance and this work should not be confused with capital improvements,” Mr Beer said.
“Repairs and maintenance can be claimed as an immediate 100 per cent deduction in the year an investor incurs the expense.
“However, if an investor improves the condition or value of an item beyond its original state at the time of purchase, this will be considered a capital improvement and must be depreciated over time.”
Mr Beer said that the ATO provides two categories over which depreciation can be claimed: capital works allowance for the structural elements of a property and plant, and equipment deductions for any removable or mechanical assets.
He also said that investors should be aware of the recent changes to plant and equipment depreciation legislation passed by parliament in November.