If you read this blog, aesthetics are probably one of your key drivers in booking a holiday property, but when it comes to running one as a business, it’s about more than just being Insta-worthy if you want to maximise your investment.
Mike Mortlock of MCG Quantity Surveyors, says some holiday home buyers are overlooking five key strategies which can turn their costly lifestyle investment into a money-making asset.
He said anyone who’s impulse bought a holiday home over Christmas must get serious about making it profitable. “Australians invariably get caught up in the holiday romance of buying a weekender and some will act on impulse while on vacation. Often investors reason that by renting to holidaymakers when they aren’t using it, the asset’s maintenance and holding costs will be covered, but that’s rarely the case.”
Mr Mortlock said instead, holiday home buyers must seek maximum rental income and depreciation benefits to make the investment viable. “Most are buying emotionally and discover that higher-than-normal vacancies make their investment returns marginal at best. But smart investors know there are moves which can turn the numbers around.”
Mike shares five key rent boosters that also deliver great depreciation benefits.
Ensuring your holiday home is airconditioned is essential for attracting holiday makers. Vacationers will spend plenty of time relaxing at your short-stay, and they’ll want their comfort levels to be spot on.
Guaranteeing your home has split system air-conditioning and insulation not only helps improve the holiday experience for renters, but delivers tax benefits too.
“Holiday homes that are pet friendly command a premium, as pet owners look to take their ‘fur-babies’ on holiday which saves on the cost and stress of kennelling.
But improvements which help create pet-friendly rentals also provide depreciation benefits. Think boundary fencing, hardwood floors, pet proof landscaping. Even items such as an external doghouse can be depreciated.
Holidays are built for family barbeques and lounging in a shady spot.
The addition of a roofed outdoor relaxation and entertainment area will drive holidaymakers to your home. They are also filled with depreciation opportunities such as ceiling fans, built in barbeques and benchtops.
Even when near a beachside holiday spot, there’s no denying the appeal of a pool when holidaying.
If you’ve been fortunate to buy a home with a pool, don’t forget to claim depreciation benefits on the fencing and filtration system.
Wifi and entertainment
Providing unlimited wifi has become pretty much mandatory for holiday homes. Access to streaming services, scrolling through websites on local hotspots or checking in on updated weather alerts and surf conditions make web access a must.
Simple elements such as supplying a television can improve your tax deductions. For example, televisions have an eight-year effective life, so under the diminishing value method, a $2,000 TV will provide $500 in deductions in the first full year of claim.
While depreciation rules for computer equipment are currently found within the commercial sections of the tax legislation, it’s likely that computer equipment will become a residential plant and equipment item in time. Either way, routers and range extenders will always attract deductions.
–MCG Quantity Surveyors is a national firm founded in 2011 that specialises in construction cost estimating and property depreciation schedules.