Investing in a property with a pool

July 25, 2020

Given the recent warmer weather, many Australians may have considered taking the plunge to purchase a property with a pool.

For those on the market for a new home or a rental property, there are plenty of properties with pools available. Statistics published recently by The Daily Telegraph suggest that Australia has more swimming pools per capita than anywhere else in the world and 90 per cent of Aussies think a pool will add value to their property.

Before you take a dive and splash your cash on a property with enticing cool blue waters, there are some important factors for you to consider, particularly if you are planning on renting out the property to tenants.

Safety should be your number one consideration

Sadly a spate of recent drownings in New South Wales is a reminder for homeowners and landlords to ensure that pool areas meet safety requirements.

Before you buy a home or an investment property with a pool it is important to check the requirements of your state government and ensure the property you are purchasing is compliant with regulations.

While the rules differ in each state, there are some key aspects you can scrutinize to ensure the pool area is fit for use prior to purchase. Below is a handy checklist:

  • Ensure fencing is adequate and meets any height guidelines
  • Check that gates are fitted with a latching device, swing outwards from the pool area and are self-closing
  • Find out if the pool filtration systems comply with Australian standards
  • Make sure there are no hard covers used as safety barriers in place of a fence for spas
  • Obtain a Swimming Pool Certificate of Compliance before properties are sold, purchased or leased. The New South Wales Government introduced this as legislation from the 29th of April 2016 and no transaction should take place without this in place

Factor in the additional costs of maintenance and insurance

According to research published by The Daily Telegraph, the maintenance costs involved in owning a property with a pool can set you back more than $2,000 a year. This cost increases to $5,000 if the pool is heated.

Rental property owners must always be prepared to budget for necessary repairs and maintenance costs. However, if a rental property contains a pool the potential costs are generally higher.

If tenants are unwilling to keep the pool cleaned regularly, this may mean hiring a cleaner to complete the job to avoid the water turning into a murky algae and leaf filled disaster.

As there is an increased chance of accidents occurring in properties that contain pools, insurance expenses are also likely to be higher, so investors must factor this into their budget.

It isn’t all bad news though. Those who rent out a property and earn an income from the rent generated are eligible to claim the costs of repairs, maintenance and insurance in the year the expense is incurred when they visit their Accountant.

Will a pool increase the value of the property?

Whilst pools sound like appealing features, they don’t necessarily add value to a property. In fact, The Daily Telegraph reported that a pool will rarely add enough in extra rent to make it feasible for a landlord.

Similarly, for those hoping the pool in their rental property will help to attract a potential tenant, oftentimes it can result in the exact opposite. For some tenants pools can be seen as a hassle or even dangerous if they have a young family.

If you’re on the hunt for the perfect property, research suggests that a pool isn’t likely to be the only factor of importance on your list. A survey of more than 1,000 homebuyers by finder.com.au found that swimming pools were the seventh most desirable feature in a home. More desirable items sought out on the list included air conditioning, a garage or carport area, a backyard or garden, solar panels, a deck or pergola and a dishwasher.

Keep this in mind when performing an open inspection. At the end of the day, you’ll want to find a property that ticks most of the boxes on your list.

If you’re planning to rent the property, also be sure to ask the Agent or a Property Manager for an appraisal of the weekly rent so you can determine your future income. They should also be able to provide a quote for Property Management costs so you can estimate the expenses involved.

Pools can add an extra splash to your depreciation benefits

One benefit of renting out a property with a pool is the additional depreciation deductions the owner will be eligible to claim.

Investors who are aware of their eligibility to claim depreciation deductions often focus on the building itself and the assets contained inside. However, outdoor items and structures are also depreciable due to the wear and tear that occurs over time.

The following graphic provides examples of some of the structural items that can be claimed as a capital works deduction and some of the easily removable assets that can be depreciated as plant and equipment.

As you can see, items in the pool will result in $2,874 in deductions within the first financial year alone for the owner of this property.

Fixed items such as the inground pool, slide, diving board, spa, pool fence and pool house resulted in $1,577 in capital works deductions in the first financial year for the owner.

Easily removable plant and equipment assets such as the furniture, pergola, couch, outdoor lights and the pool filter and pump resulted in $1,297 in depreciation deductions for the owner in the first year.

To learn more about the depreciation deductions for outdoor items, click here. Alternatively, speak with one of the expert staff at BMT Tax Depreciation on 1300 728 726 today.

Author bio:

Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation.
Bradley joined BMT in 1998 and as such he has substantial knowledge about property investment supported by expertise in property depreciation and the construction industry.
Bradley is a regular keynote speaker and presenter covering depreciation services on television, radio, at conferences and exhibitions Australia-wide. Please contact 1300 728 726 or visit www.bmtqs.com.au

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