The Hot Summer of 2020

Many areas of Australia are now experiencing a very hot summer as we enter 2020.

In that respect, buying a property with a swimming pool may seem an attractive lifestyle option for property buyers as a feature that might appeal to tenants.

While swimming pools can be a fantastic lifestyle feature of a home, for property investors they can prove to be a financial burden that eats into cash flow.

Many investors buy a home with a swimming pool believing that they will prove attractive to tenants and therefore achieve a higher rental return.

In reality, prospective tenants tend to be split between those who would like a swimming pool and those do not want a swimming pool.

As a result, properties with a swimming pool generally does not command significantly more rent than a similar property without a swimming pool yet the investor can be saddled with high maintenance costs associated with swimming pools.

It is an unfortunate fact that too many people have fallen into the trap of buying a house with a swimming pool because over the last decade there has been a major focus on outdoor living in the property market with property owners spending larger amounts of money on enhancing the outdoor living features of their homes.

This focus on lifestyle is encouraging more property buyers to purchase homes with swimming pools.

The financial reality is that property buyers are unlikely to recoup the additional money they paid for the swimming pool in the short term.

This is because if they decide to sell the property after a short period of time, there will be as many buyers who do not want a swimming pool as those who want it.

For investors, the purchase of a home with a swimming pool can prove a financial headache. While swimming pools are attractive to some renters who have children, there are an equal amount of tenants who do not want a swimming pool.

In addition, the landlord has the problem of ensuring the swimming pool complies with all current Federal, State and Local Government regulations. They also have to pay the cost of regular local government inspections. Landlords also have to consider any public liability claims which may arise if someone is hurt using the swimming pool.

There is also the cost of maintaining the swimming pool. Swimming pool equipment needs to be regularly replaced and this can prove very expensive. For example, the cost of a swimming pool pump to purchase and install can be in excess of $1,000.

In addition, there are also the growing financial costs of paying for the water, maintenance, cleaning and chemicals associated with swimming pools. If you are buying an apartment in a complex which has a pool, then these costs can be shared. However, stand-alone property owners must carry the full costs.

If you have purchased a property with a swimming pool, it is important that you claim all the tax deprecation benefits associated with it including the swimming pool equipment. These tax depreciation benefits can help assist with the overall cash flow of the investment property.

Tax deprecation benefits associated with buying an investment property can account for up to 60% of its total purchase price.

To claim these generous tax benefits, property investors much use the services of a professional tax depreciation company like DEPPRO.

- Paul Bennion, Managing Director, DEPPRO