Are you looking for ways to improve the value of your home or investment property? With climate change at the forefront of many people’s, and organisations’, minds, it stands to reason that most people (66% in fact) look for a home that includes environmentally friendly features. The result is that properties with these features are becoming more sought-after, and therefore more valuable. In fact, Energy-Efficient homes can sell for $125,000 more, on average.
That being said, we’ve pulled together some eco-upgrade ideas for your consideration, to help you either improve the value of your property, and/ or save money on your tax return.
What are eco-upgrades?
Eco-upgrades are basically what they sound like - features you add around your home (or investment) to improve the environmental sustainability of the property. They may reduce the energy footprint, water usage, impact on your local environment or support for other eco-friendly features (such as electric vehicles).
If you need to finance your improvements, several banks now have “Green Loans” for qualifying features. Do a little research and you may be pleasantly surprised!
What are the tax benefits of installing eco upgrades?
Property investors who make improvements can reduce the tax they owe on rental income through tax depreciation on their buildings and fittings.
Capital works allow you to make deductions based on the improvements made to the building itself (such as new roof or retaining wall).
Plant and equipment deductions can be applied through improvements to items that can easily be removed from the property (such as solar panels).
As such you may be able to write off a portion of your improvements on your tax return, thus decreasing tax payable. Speak with your accountant for specifics for your property.
The following upgrades may be able to be depreciated:
- Solar panels + battery - we’d be remiss if we didn’t mention this one first. You (or your tenants) can save on energy bills, reduce your carbon footprint and (if you're an investor) your tax bill.
- Ceiling fans - as a relatively affordable improvement, ceiling fans can also be used as a tax deduction. If they cost less than $300 each, you can make an immediate tax deduction in the same financial year for the full cost.
- Insulating your ceiling and/ or walls - insulation can be key in improving the energy efficiency of your property. This is claimable as a capital works deduction.
- Window glazing - depreciable as a capital works deduction, window glazing is a great way to further insulate the property.
- Water tanks plumbed into toilets, washing machines, and irrigation - lowering the cost of water requirements (ie water purchased from the water utility) is an investment with double benefits: lower expenses (and/ or higher rental demand) plus investors can benefit from a 40% deduction each financial year (under plant and equipment deductions).
- Car chargers - if you or your tenants have an electric vehicle (EV), this one is a requirement! It also means, as an investment property, it places the home in higher demand. It too can be depreciated as a tax deduction. When paired with solar panels and a battery, car chargers are even more powerful (and better for the planet). And you won't need to waste money on petrol!
How can eco-upgrades improve the return of my home or investment?
As we mentioned in the intro, globally 66% of people purchasing a home/ construction consider sustainability to be extremely important (27%) or slightly important (36%). Buyers are increasingly looking for ways to save money down the road – so if your home has eco-upgrades, your property will be more attractive and therefore attract a higher sale price.
In fact, Energy-Efficient homes attract higher interest from buyers, spend less time on the market, and sell for an average of $125,000 (17.1%) higher than other homes. As the cost of living continues to rise, buyers are very aware of the cost savings that solar energy can provide. To illustrate this even further, 77% of Australians think a house with solar is worth more than a property that relies on traditional energy sources.
A house with lower running costs is attractive not only to potential buyers, but to renters too.
If you have tenants, you may be able to charge higher rent for eco-friendly features. For example, people with an electric vehicle (sales of which grew by 86% in Australia in 2022) will be looking for a car charger and solar + battery system.
Another example is water tanks that are plumbed into the house. These tenants will pay a lower water bill, so you may be able to request higher rent.
Whether you’re a property owner or investor, installing eco-upgrades will improve the return of your property. This will be through the sale price, demand and rental price, or both.
What happens if I sell my house with a solar + battery system?
A solar + battery solution improves the value of your home - so you will be able to sell for a higher price than if you didn’t have one! Solar + battery is a sustainable feature that many buyers are looking for because it significantly reduces the running cost of the home.
At Plico, we understand that it’s not always possible to know if you’re going to have the same property for 10 years. That’s why we make it easy for our members to transfer their contract with us to the new property owners, or you can choose to pay out your system and add this cost to the sale price. You will benefit from the increased value of your home and the new owner will benefit from the solar + battery system.
If all this talk of savings and tax deductions has you curious about how a Plico solar + battery solution can help you today, talk to the friendly team about how much you could save. Not only will you maximise the value of your property, but those living in the home will be able to access clean, affordable power during night times, blackouts and outages too!
So why wait? Book in your obligation-free call today to have solar + battery from just one low weekly fee. You can view our different solar + battery systems by clicking here or calculate your projected savings with our Solar Savings Calculator. You can also get in touch with one of our switched-on team members by calling 1300 175 426 to see how a solar + battery system can help you save.
