By Ken Raiss December 22, 2021

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Best time to renovate a home that will become an investment | Ask the Tax Expert [video]

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Best time to renovate a home that will become an investment | Ask the Tax Expert [video]

When is the most tax-effective time to undertake a renovation?

You’ll find out as you watch this week’s Ask the Tax Expert video as Ken Raiss answers Lynda's question about when is the best time to renovate the new home that she's buying using a First Home Owner's Grant.

You see...she plans to make her home investment in the future.

Ask the Tax Expert - Best time to renovate a home that will become an investment

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Ken explains a great way of increasing your depreciation claims using a "split depreciation" schedule.

Michael Yardney and Ken also discuss some of the depreciation changes in the budget and the importance of timing renovations to enable you to claim depreciation tax benefits.

Ken also explains the concept of the "low-value pool".

ALSO READ: Ask the Tax Expert - How can I avoid paying Capital Gains Tax?

About Ken Raiss Ken is director of Metropole Wealth Advisory and gives strategic expert advice to property investors, professionals and business owners. He is in a unique position to blend his skills of accounting, wealth advisory, property investing, financial planning and small business. View his articles

4 comments

Andy Lemann 2021-12-23 07:46:54

1 reply

Sachin 2018-05-25 14:16:49

Thanks Michael and Ken. This was very helpful. I had a question: Ken said that it is good to renovation between tenants. I have bought an investment property recently and planning renovation of it. Does it apply to me too? Should I also renovate i ...Read full version

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Andy Lemann December 23, 2021

Thanks for that information Ken and Micheal,
Follow up question: As I understand it, when I depreciate a building or the plant and equipment in it, that lowers my cost base when it comes time to sell and leaves me having to pay more in capital gains tax. My guess is that, for people in the higher tax brackets, it is more beneficial to claim the depreciation over the years and accept the higher CGT. However for people in the lower tax brackets, is it better to not claim the depreciation so they end up with less CGT if they sell? If so, where is the cut-off point? Thanks. Andy

1 reply Reply

Michael Yardney December 23, 2021

Andy, your understanding of the situation is correct.
However most smart investors never sell their properties, so it’s better to have a bird in the hand today rather than two in the bush in the future when you don’t even know what the future may hold

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Sachin May 25, 2018

Thanks Michael and Ken. This was very helpful.

I had a question: Ken said that it is good to renovation between tenants. I have bought an investment property recently and planning renovation of it. Does it apply to me too? Should I also renovate it between tenants or do it now (for the depreciation to work for me)?

Thanks for keeping up the education!
Sachin

1 reply Reply

Michael Yardney May 25, 2018

Sachin. If you renoavte a proeprty as soon as you buy it the cost is a “capital cost” – an improvement and not a repair so it is not depreciable, it just adds to the cost base for capital gains tax

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Best time to renovate a home that will become an investment | Ask the Tax Expert [video]

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