How to ‘Go green’ on Investment Property
Landlords who ‘go green’ on their investment properties are paying off financially. The old belief was that you can either be a capitalist investor or an environmental activist. Not both.
There are methods to boost your investment property’s green credentials while increasing lease-ability and minimising your tax burden via cost write-offs and depreciation benefits.
It seems evident from the federal election results earlier this year make it clear that many Australians are increasingly concerned about climate change and have expressed support for greater commitment to the net zero targets.
Environmentally friendly and energy-rated design is becoming increasingly important and is now inherent in most building approvals.
Not only does it reduce the impact on the planet, but it ultimately it lowers operating costs for tenants. Whereas this translates into depreciation benefits and greater appeal to tenants.
Courses of action that property investors can take to help both their bank balance and the planet are:
Heating and cooling
Of course, heating and cooling systems account for the largest portion of residential building carbon dioxide emissions and operating costs. Due to its high energy consumption, it leaves a heavy footprint on the planet.
Not only that, we’ve just experienced a cold winter with persistent below-average temperatures, resulting in unprecedented demand on electricity suppliers and forcing regulators to order generators back into the market to avoid power shortages.
As the weather changes, so does our reliance on heating and/or cooling systems. But there are ways to modify our investment properties to make them more efficient.
Having insulation in your roof and wall cavity is a good start. For investment properties, the works can be claimed as a capital works deduction and usually cost around $2000 to have your ceiling blanketed.
If you are replacing all the insulation your investment property, cellulose insulation is the most eco-friendly kind of insulation to use. Cellulose insulation has a long lifespan and is made up of 80-85% recycled materials.
It may seem obvious, but installating ceiling fans at a couple of hundred dollars a pop is a relatively economical cooling option. They are a simple addition to get the air moving and reduce the impact on some of those stifling summer days. If it costs is less than $301, the cost will be fully depreciable on your next tax return.
Window film and other design options can be used to keep out the heat in the summer. Tinting costs typically range from $50 and $100 per square metre and are considered a capital works deduction.
Power generation and saving
Solar systems are quickly becoming a common feature in new buildings and can be retrofitted easily. With battery storage it’s easier to justify the cost. While installation for a decent system doesn’t come cheap at $5,000 to $15,000, the benefits are well worth it.
Not only is it attractive to tenants due to the electricity savings, as a landowner you can also enjoy a tax depreciation rate of 10% per annum.
Wind turbines which are less common are a great source of energy if your property investment is an acreage. The turbines, which cost about $2,000, can also be depreciated at a rate of 10% per year using the diminishing value method.
By switching to LED bulbs, you can make your investment property more eco-friendly because they use ⅓ of the amount of energy and last 80% longer thank other bulbs. LED bulbs convert 95% of their energy into light and only waste 5% of that energy in the form of heat. With these advantages, LED bulbs generate much less waste than regular bulbs.
Installing LED bulbs in your investment property is an easy way to begin converting a property into a sustainable one. Retrofit kits are available if a particular fixture does not have LEDs. These kits can be installed to any lightning fixture and use LED bulbs.
The long-range weather forecast of ongoing rain this summer justifies the inclusion of a water tank on this list. Water tanks have been a staple in Australian households for decades. The capturing and reusing of tank water for toilets and washing machines is a simple means of reducing excess water charges.
This keeps tenants happy, and can mean an increase in rental income for the right property. While also being good for the environment.
As of July 2019, rainwater tanks are listed by the ATO as a plant and equipment item. So not only can they be installed and placed in a home for far less than $10,000, but they can be charged a whopping 40% instead of the standard 2.5%.
Futureproofing for cars
It’s rare to drive into a major shopping centre carpark these days and not see an electric vehicle.
The federal government is likely to deliver on its election promise by offering incentives to make electric cars more affordable, it’s likely we’ll see the demand increasing.
This means that sooner or later you will have to equip your garage with a car charger. Doing it sooner will no doubt appeal particularly to inner city tenants who have adapted their vehicle usage and don’t face the same challenges presented by regional travel.
Domestic car chargers can cost around $750 to $1500 and will net you a 20% depreciation rate each year.
Sensible, eco-friendly landscaping
There’s money you can save by designing a garden that blends in with its natural environment. This means a low maintenance garden filled with mulch and native plants that require very little water.
A landscaped garden could cost up to $20,000 but you can claim some of that on your tax return. Plants and turf are not deductable, but hard landscaping such as retaining walls, concreting, paving, and fencing will.
Not only that it makes tenant maintenance much easier and helps reduce your carbon footprint.
The landlords who ‘go green’ on their investment properties will not just help the planet and their bank balance. Those green features that landlords implement will make the property more attractive to buyers or tenants if properties are to be rented.
Remember experienced property managers can save you time, money, and headaches.
If you are looking for a experienced property manager with your best interests at heart – look no further than Paul Hill Realty Hope Island! You won’t find a team that is more respected, reliable, and trusted in residential property management.
Paul Hill Realty office is located at Hope Island, we manage residential properties anywhere on the Northern end of the Gold Coast. Paul Hill Realty Hope Island is your best choice in property management.