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I’ve received some interesting questions about renovations following my last blog post.
If you missed what all the fuss what about, you can click this link and discover whether you should renovate your investment property.
Here are some of the questions I received through the week:
– Are renovations tax deductible or a capital expenditure?
– Should I hire a quantity surveyor?
– Should I spend more money on an investment and renovate when I can afford it, or should I make sure I have enough money from day one to renovate straight away?
How to finance the renovation:
Sometimes you can get a “construction loan” on a property, or more often borrow equity and get the property revalued after the work.
Without going into too much detail, it’s important you speak to your mortgage broker first as every case is different and there’s always a limit to refinancing and getting new valuations.
Is a renovation tax deductible?
If you purchase a property and do a major renovation before you put a tenant in, that’s generally a capital cost.
If you make “repairs” whilst the property is tenanted, those costs are usually tax deductible.
It’s best to get a quantity surveyor in to do a depreciation schedule. They’ll help you figure out what and when to make deductions.
And remember… always seek your accountant’s advice first.
If you have limited money to invest:
I always prefer invest in the right property now and have to wait to do a renovation, rather than buy a cheaper property that doesn’t quite fit my criteria just because it’s a “renovators delight”.
The mistake people make is that they don’t enter the market at all and end up losing a fortune due to lost growth in the property.
Have you had experience with quantity surveyors and depreciation schedules? What would you suggest to others going through the same process?
Let me know on our facebook page.
Did you know Your Empire can manage everything from A-Z for your renovation? I was surprised to hear that many of our clients had no idea. We have our very own list of contacts, valuers, construction managers, tradespeople and even mortgage brokers that do all the hard work for you.
If you want to talk, book a free and confidential strategy session: https://calendly.com/yourempire/15min