Solar_Panels_Batteries_Canva
Australians are installing batteries at record rates. Image: Canva
  • Property investors can now enjoy both financial and environmental dividends from effectively eco-upgrading their assets
  • Effective power generation and water collection among the five ways to upgrade a property
  • Also important to future proof, especially in term of EV chargers

Smart landlords who ‘go green’ on their investment properties are reaping significant financial rewards, says a well-regarded quantity surveyor.

MCG Quantity Surveyors managing director Mike Mortlock noted that the old trope was that property investors were either raging capitalist investors or eco-warrior, but not both. This isn’t the case, he said.

“I beg to differ because there are ways improve your investment’s green credentials while boosting the rent and minimising your tax burden through cost write-offs and depreciation benefits.”

Mike Mortlock, MCG Quantity Surveyors

Mr Mortlock also argued that the issues is more poignant, with Australian voters voicing their support for climate change louder than ever at the election this year.

“We have reached a point where the public values eco-friendly moves designed to help address climate action. Think global, act local as the saying goes,” he said.

mike-mortlock
Mike Mortlock. Image – Supplied.

“This extends to housing too with energy-rated design part and parcel of most building approvals.

“Energy saving measures in investment properties result is more tenant appeal – so, higher rents – lower running costs, depreciation benefits and a cleaner planet.”

In light of this, Mr Mortlock has outlined five moves that property investors can make which could both help the planet whole benefitting the bank balance.

5 Ways to Profit from Eco-Upgrading an Investment Property

  1. Heating and cooling
  2. Power generation
  3. Water Collection
  4. Future proofing for cars
  5. Gardens a-growin’

Heating and cooling

Mr Mortlock noted that warming and cooling typically are major carbon emitters, with systems hurting the planet.

Despite this, he said there are moves to benefit the environment.

“Insulation to roof and wall cavities is an excellent start. For around $2000, you can have your ceiling blanketed and this can be claimed as a capital works deduction,” he said.

“The installation of a ceiling fan helps too, and if it costs less than $301, the outlay is fully depreciable on your next tax return.

“Then there’s window film which can keep out the heat in summer. A window tint will set you back between $50 and $100 per square metre in most instances and is a capital works deduction.”

Power generation

Going off-grid is highly appealing to many investors, especially all houses connected to the grid are required to pay a flat supply charge, regardless of usage.

There many ways to create independent energy sources, even on a small suburban block.

“Solar systems and battery storage are easy retrofits. While not cheap – a decent system installed will cost between $5000 and $15,000 – they can be worth it. Apart from being appealing to tenants, installing solar allows you to depreciate its cost by 10 per cent per year under the diminishing value (DV) method.

“There’s even the case for a wind turbine if your investment is an acreage. A wind turbine costing around $2000 can generate formidable power. Best of all, depreciation benefits based on an effective life of 20 years gives you another 10 per cent per year via the DV method.”

Water collection

Mr Mortlock referred to water tanks, which have been common in Australian homes for decades. He said using such water for toilets and washing machines makes sense. From an investor perspective, they can keep the possibility of tenants having to pay excess water charges to a minimum.

“This can mean a rent boost for the right property,” he said.

“Water tanks can be installed and plumbed into a home for well under $10,000 and as at July 2019, rainwater tanks were listed by the ATO as a plant and equipment item. This means that rather than a 2.5 per cent deduction, you get a whopping 40 per cent rate of claim”

Future proofing for cars

There is no doubt the future will be full of electric cars, said Mr Mortlock, meaning it is vital to consider fitting your garage with a car charger. Many new apartments have EV chargers. 

“This would appeal particularly to tenants in the inner city who are keen to keep their Teslas topped up.

“Domestic car chargers cost around $750 to $1500 and I’d expect eventually we’ll see them going into properties as regularly as water tanks. In the meantime, vehicle chargers will net you a 20 per cent depreciation rate each year.”

Gardens a-growin’

Lastly, Mr Mortlock said landscaping with mulching and natives makes sense.

“Natives are low maintenance plants that don’t consume much water. They also do their bit in converting back carbon emissions.”

“A thoughtfully designed landscape might set you back $10,000 to $20,000, but you can claim some of it back through your tax return. Things such as plants and turf won’t attract any deductions, but hard landscaping such as retaining walls, paving, concreting and fencing will.”



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