How to Maximise Your Tax Returns Through Property

Houses go through their eras. The odd floor plans and colours that were all the rave back in the 60s are almost unthinkable today. We’ve seen all sorts of styles come in and out, but we’re glad that the green and orange kitchens of the 60s and the brown palettes that popped up in the 80s are out (thank goodness)!

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And beyond personal tastes in colour, and possibly more importantly (though those colours can really be an eyesore), things start to break down and need repairing the older a house gets. You want to make sure you’re on top of these repairs, and that could be just enough in the short-term. But sometimes it’s actually easier and more valuable to do away with the old and bring in the new, particularly as wear and tear means that it might cost more to fix then replace altogether.

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And that’s where renovating comes in!

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Renovations can be anything from a simple paint job to a full-scale remodel of your home. It could involve installing a new kitchen or starting from scratch in your bathroom, adding an extension or deck, or upgrading the lighting and electrical systems. Renovations can be an exciting and rewarding project. If you have a passion for interior design, DIYing can be a cheaper and enjoyable route to take when you renovate.

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Why renovate?

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By renovating your property, you can both increase the value of your home or investment by thousands of dollars while also creating a more enjoyable living space that’s more attractive to other buyers or renters, or for yourself! In this process, you’re also able to generate equity in your property—something you put towards another property purchase, and accelerate your portfolio growth.

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What should I renovate?

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There’s no single answer to this question, but what you can renovate will depend on how much money you’re willing to spend on the renovation and how costly those are. There’s a few things you should certainly consider that will help guide your decision about what to renovate:

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• A fundamental principle when deciding what you want to renovate is that it shouldn’t be based purely on personal design choices.
• Make sure your property is liveable! There’s nothing worse than a hot water system that just doesn’t work, a stovetop that keeps breaking down or cracked, draughty windows. The older the property is, the more of these issues you’ll find, but it’s important to make sure those essentials are addressed.
• You’ll of course need to consider the cost of the renovation, the return on investment, and the likely impact on the value of your property. Larger renovations that involve structural changes to the home will generally be more costly than aesthetic changes such as painting, but it may be a wiser choice in some cases particularly when appliances or installations are falling into disrepair. For instance, old leaky pipework that becomes apparent through leaking taps that you can temporarily fix can ultimately lead to a full-blown mould situation that is extremely costly to repair and unsafe to live in. Fixing a mould situation is not only costly, but adds absolutely nothing to your property’s value! So sometimes a bit more spent earlier on before damage occurs can save you a lot in future. Assess your property’s condition.
• You need to look into the local market to understand what it is that buyers and renters value when it comes to homes in your property’s region. Have a look at  what types of renovations have been made in other properties in your area and what has had the most impact on the value of the property. When you know this, you’ll be able to factor that into planning your renovation to be able to get the biggest return on investment.
• It’s crucial to consult with a professional who can help you maximise the value and return on your investment when planning a renovation project. They will also help you understand legislation and council regulations that apply to your property and make sure everything goes ahead without any hiccups.

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With careful planning and consideration of costs and likely return on investment, a renovation project can be a great way to create equity in property and increase the value of your home or investment.‍ If it’s an investment property, you can also use renovations to boost cashflow through increased rent. By renovating your home,  you’re also making the home a more comfortable and enjoyable space to live in, which is a good thing for you and your family, and for any future buyers or tenants. It’s a win-win!

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