Property Maintenance

5 tax-deductible home improvements you can make today

Published 17th June 2020Updated 18th August 2022

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Tax time is around the corner, and we all know what that means. It’s time to lodge your tax return, and more importantly, claim your investment property tax deductions. So what are you entitled to claim? Whilst we recommend working with a registered tax agent to get professional advice for your tax return, we have collated a list of 5 home improvements you can make today to your investment property that also qualify as deductions you can claim. 

Now is the time to think about how you can maximise your return, but also how to keep your tenants happy so why not do both? As more tenants are working from home right now, these minor improvements could have a major impact. Read on to see if any inspiration strikes. 

1. Boost your green energy with solar power

Solar power is a great form of investment that is beneficial to both the environment and also the electricity bill. Every tenant will appreciate a lower energy bill and in the long run, this investment can also enable you to charge a little bit extra for rent. Solar systems are tax deductible however they are offset against their depreciation rate, which means you’ll be able to claim a portion of the expenses over several years, rather than an immediate deduction.

2. Get ahead of summer with ceiling fans

Ceiling fans can make a massive difference during the hot Aussie summer by increasing ventilation and air flow around the home. It’s also a more cost efficient form of cooling compared to air conditioning and a very budget friendly home addition. With rising power costs, your tenants will greatly appreciate this energy efficient addition and you’ll also be able to obtain tax advantages. Capital item purchases that are below $300 in cost can be claimed in full within the same tax year.

3. Refresh with a paint job

A fresh lick of paint can do wonders to any living space and instantly bring the wow factor up, plus it’s one of the most budget friendly improvements you can make to a property. Not only can paint revamp the interior of the property but also protect it from the external elements when painted on exterior surfaces. A new look for your tenants and tax deductions for you? Win-win! 

4. Upgrade window coverings

With Australia’s temperamental weather and the harsh natural elements, windows and coverings are often one of the first features that are damaged. To upgrade windows to be more durable under rain, hail or shine, you can opt to invest in double glazed windows which can keep your tenants warm in winter and cool in summer. Who doesn’t like being toasty in winter without having the heater on blast?

Fly screens and window locks can also add to the security factor for your tenants and also keep out pesky flying creatures. These additions can also be claimed immediately if each individual item is below the cost of $300, making them a perfect investment right before the end of the financial year. 

5. Invest in new fencing

If your fencing is looking a little tattered and worn out, then it’s time to install a new fence. Not only will this increase the sense of security for your tenants living in the property but it’s also an immediate tax deduction. As you’ll be restoring the fence to a working status, this would be classified as a repair and an expense that is necessary for your investment property. 

As a rule of thumb, any costs incurred from repairing or maintaining your investment property can be claimed within the same financial year. However, capital improvements which involve the enhancing of pre-existing features are depreciated against the asset life. Be sure to keep a record of all the additions you make to the investment property and hire an accountant if things get too complicated or you’re unsure.

Disclaimer: The views, information, or opinions expressed in this blog post are for general information purposes only and should not be relied upon. We have not taken into account specific situations, facts or circumstances, and no part of this blog post constitutes personal financial, legal, or tax advice to you. You should seek tax advice from your accountant, specific to your situation.

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