Since the announcement of the HomeBuilder grant of $25,000 we have had questions from our property investor community asking if they can use the grant to improve or extend their investment property. And subsequently, if they renovate the kitchen or bathroom of their investment property, what tax depreciation deductions are claimable.
Property Investors are not eligible for the Homebuilder grant if they are looking to buy a brand-new home that will be used as an investment property or if they wish to renovate their existing investment property. Also, companies and trusts who own residential property are also not eligible for the HomeBuilder grant.
The Australian Government is trying to assist the residential construction industry by offering the HomeBuilder grant of $25,000 to owner-occupiers and first home buyers.
However, as per treasury.gov.au - ‘If you move into the property as your principal place of residence immediately following the renovation and satisfy all of the eligibility criteria, you may receive the grant.
To access HomeBuilder, owner-occupier applicants must:
- $125,000 per annum for an individual applicant based on their 2018-19 taxable income or later;
$200,000 per annum for a couple based on their combined 2018-19 taxable income or later.
The HomeBuilder grant cannot be used for any additions to your principle place of residence such as detached structures ie granny flats, sheds or garages, or used for swimming pools, outdoor spas, basketball/tennis courts.
Yes. If you are renting out a room at your principal place of residence you can use the HomeBuilder grant for your renovation. You must be residing at your principal place of residence after the renovation has been completed.
No, you are not eligible for the $25,000 HomeBuilder grant. The renovation has to be undertaken by a licensed builders.
You will have to apply for the HomeBuilder grant through your State or Territory Revenue Office that you live in or plan to live in. Click here to find your states information.
Your application for the HomeBuilder Grant must be received by no later than the 31st of December 2020 to the relevant Revenue Office. Click here to find your states information.
Property Investors even though you are not allowed to use the HomeBuilder grant for your future investment property renovation, you can still claim great tax depreciation deductions from your renovation! You are also entitled to claim tax depreciation for previous owners renovations, Division 43 structural works.
For example, our property investor clients Jean and Inge purchased an existing property that was an original 1970’s house in 2017. Jean and Inge completed a $165,000 renovation in February 2019. The renovation included: new plumbing, electrical, kitchen and bathroom, deck, paint inside and out, new heating and cooling. Jean and Inge were able to claim in the 2019-2020 financial year $7,852 in tax depreciation deductions. And over the first five financial years $28,362.
A Capital Claims Tax Depreciation team member will be happy to answer any questions you may have about claiming depreciation on your investment property’s renovation. Call during business hours on 1300 922 220 or via email at firstname.lastname@example.org.
Mark is an expert quantity surveyor, business owner, public speaker and property developer. With 20+ years experience in the construction and quantity surveying industry Mark’s specialist expertise have been sought in consultant capacity by professional bodies such as the National Institute of Accountants and the National Tax and Accountants Association, and he has presented at various property and tax seminars and expos nationwide. Mark holds a Bachelor of Construction Management from the University of Newcastle, is an affiliate member of the Australian Institute of Quantity Surveyors and a Registered Tax Agent.View all posts by Mark Wilkins