If you’re considering taking advantage of the new HomeBuilder scheme to get those renos done, make sure you put some serious thought in them. With strict eligibility criteria (your renovation needs to be worth more than $150,000 to qualify), lots of people can’t access the grant as they don’t have major works planned. However, if you do have major works planned — perhaps you’re lifting the house and adding a new level, or finally adding the master bedroom wing you’ve been dreaming about — then a tax-free grant of $25,000 is a massive money-saver.
Many people are choosing to bring forward works that were already planned, while others are just beginning the design process. If the works you’ve got planned fall short of the $150k minimum spend however, you might be considering adding on some extra work to get you over the line. If that’s the case, find out below what adds value to a house to make sure every cent of your money works for you.
Beyond major restorative or transformation works, there are a couple of places throughout your house that you can update to add value. Property market observers advise updating or renewing bathrooms or kitchens – even small fixes such as replacing a cracked or dated splashback, replacing a bath or adding skylights can greatly improve the quality and value of a home. Also think about easy repairs that create an invaluable good first impression: a fixed-up fence, a new carpet or resurfaced flooring.
It might also be worth considering raising the house, if that’s something that would be suitable for your area. You might not have had any flooding issues since you bought the house, but it could be worth a quick chat to the local council to see if the house has ever been subject to severe flooding issues. Raising the house even just one metre or so can have a massive impact for not just you, but also for the resale value of your home, as valuers will take into consideration this forward planning.
If you’re still not sure on what your renovation possibilities might. E, heck out these articles on current house trends, tips and tricks:
How long till you retire? How secure is your employment? Thinking carefully about your earning potential between now and retirement will help you understand how what you can borrow and afford. If you are planning to stay, you will get the benefit and enjoyment of the renovations.
Do you need to stay close to school or work? If that’s a consideration, renovating may be worth more to you than buying further out.
Look closely at what your property is worth (there are plenty of online calculators) and keep track of how much similar local properties with one extra bedroom or bathroom sell for. That will give you a sense of the value-add to your home equity that a renovation might represent.
Be honest with yourself about the total cost of renovation. There are myriad expenses not always initially apparent. These may include:
Consider the possible long-term savings of retrofitting your home to be more energy-efficient. Proper insulation, secondary glazing, draught excluders and solar PV energy are expensive upfront but will save on long term running costs. It’s likely, as energy costs increase, homes that are at least partially off grid will be more attractive and valuable over time.
And remember that for some, even with help from HomeBuilder, renovation won’t stack up economically. Some older families may decide that it’s more economically viable to put money aside to help children get a foot on the property ladder. Others may decide potentially expensive renovation is worth it to hold onto a family home to which children return as they get older. It might sound sentimental but the idea of Christmas in the family homestead is worth it, for some.
Find out what tax breaks, if any, you might be eligible for if you renovate to divide the family home into a smaller space (if you’re keen to downsize, or enhance the accessibility of your home, for example) and adding a self-contained granny flat.
However, if the granny flat is leased out, this section of the home would be considered income-producing. Your “main residence” is generally exempt from capital gains tax when it comes time to sell, but you may not qualify entirely for this exemption if a section of the property is income-producing.
You may also consider remodelling the family home into a duplex and, depending on council planning laws, convert the title into dual occupancy. However, these suggestions may complicate eligibility for the HomeBuilder grant (which seems to exclude property investors, although there’s no mention of partly converting the main place into a dual occupancy).
The best option here is to seek advice from a tax specialist.
We recommend thoroughly considering the implications of a renovation on your home. Discuss it with your financial advisor, your friends, the council — everyone you need to, to ensure you get the best possible idea of what the renovation will mean for you now and over the long-term.