{"id":19726,"date":"2017-12-12T01:00:04","date_gmt":"2017-12-11T14:00:04","guid":{"rendered":"https:\/\/www.realestatetalk.com.au\/?p=19726"},"modified":"2017-12-12T01:00:04","modified_gmt":"2017-12-11T14:00:04","slug":"to-rent-with-furniture-or-not-brad-beer","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/to-rent-with-furniture-or-not-brad-beer\/","title":{"rendered":"To rent with furniture or not? \u2013 Brad Beer"},"content":{"rendered":"

A common question asked by investors is whether to rent their investment property furnished or unfurnished. Brad Beer<\/strong> looks at how furniture can impact depreciation in terms of the deductions which can be claimed, the assets investors may not be aware will be classified as furniture and the specific types of residential properties in which furniture is more likely to be prevalent.
\nTranscripts:<\/strong>
\nKevin:<\/strong>\u00a0 A fairly common question asked by investors is whether to rent their investment property furnished or unfurnished. We\u2019re going to give you an answer to that. Furniture can improve an investor\u2019s depreciation claim. In fact, Brad Beer from BMT Tax Depreciation joins me.
\nBrad, does furniture impact depreciation in terms of the deductions that can be claimed?
\nBrad:<\/strong>\u00a0 Kevin, great to be here as always, firstly. And yes, furniture, effectively is plant and equipment. It\u2019s items within a property that are used to help increase that income. Usually, you\u2019d hope that the rental income from a furnished property is slightly higher.
\nThe furniture that you have there, all of that is a plant and equipment item. It\u2019s written off fairly quickly in comparison to the structure of the building, so yes, it gives you additional deductions and additional cash flow after tax if you furnish the property.
\nKevin:<\/strong>\u00a0 Brad, are there any assets that investors may not be aware could be classified as furniture when they\u2019re calculating a depreciation claim?
\nBrad:<\/strong>\u00a0 Firstly, they probably shouldn\u2019t calculate it themselves. But some of the items that you don\u2019t think about if you were to buy a furnished property are things like even children\u2019s play equipment is a plant and equipment item.
\nChairs outside on the deck or the porch are examples of things that may be easily missed. Things like garden gnomes are potentially things you can claim depreciation from. Anything that\u2019s kind of loose that you put inside that property or outside the property, for that matter, is potentially an item that you own that has potentially some depreciation attached.
\nKevin:<\/strong>\u00a0 I guess any house that\u2019s being rented with a pool, that has pool equipment, that\u2019s probably another good example, isn\u2019t it?
\nBrad:<\/strong>\u00a0 Yes, pool equipment. In a pool, your pumps and things have a different rate that\u2019s a bit faster than the structure of the pool. But even your other equipment around there that\u2019s loose, you generally would be providing that as the landlord and they\u2019re things that you\u2019d be entitled to some depreciation against.
\nKevin:<\/strong>\u00a0 Are there any specific types of residential properties where you\u2019ll find furniture more likely to be prevalent?
\nBrad:<\/strong>\u00a0 There are a few obvious ones or maybe not so obvious. Student accommodations are often furnished because students don\u2019t often own a lot of their own furniture, or I didn\u2019t when I was a student, some old stuff. But when you\u2019re providing that student accommodation, it\u2019s very regularly provided furnished.
\nObviously, if you have a holiday home that you use part of the time and rent out the rest of the time, you usually always have to have that furnished. A lot of Airbnb these days: people are using their properties for that sort of thing, so furnished property in those sort of situations.
\nLook, I have furnished property as well, and it\u2019s just because it was actually furnished when I bought it, which was good because I didn\u2019t actually pay for all the furniture, but I got it as part of the purchase, and the depreciation on that was quite high in the early years, as well.
\nKevin:<\/strong>\u00a0 I\u2019m curious to know from you, then, if you think that it\u2019s a disadvantage or an advantage when you\u2019re renting a property if you leave the furniture in there, Brad.
\nBrad:<\/strong>\u00a0 Furniture is something that will potentially help to increase the rental amount that you can get for the property, but not everybody wants a furnished property, either. It needs to be transient areas or areas where students might want to live and you want students as tenants who might be nice or not nice to your furniture.
\nI don\u2019t think that it\u2019s always right to put furniture into a property, because sometimes it\u2019s just not the right thing. If it\u2019s a property in the right area that has the ability to get additional rent because of that, it\u2019s a factor to consider.
\nBuying furniture for the purpose of more depreciation is not a good idea, because you have to pay for it. Depreciation is great if you have the furniture, but if you have to pay for the furniture, don\u2019t make that the reason.
\nYou have a bit more maintenance and a lot more things to fix up when you have furniture in a property, because furniture is more likely to break than your brick walls, for example, but that\u2019s why you get the claim a bit quicker. The turnover of tenants is often a bit quicker because most people in their life want to buy furniture of their own at some point.
\nLook, there are some pros and cons, and it depends on areas, but my furnished properties worked very well for me.
\nKevin:<\/strong>\u00a0 With furnished properties, too, one of the other problems is if it breaks down, you\u2019re obliged to replace it because it was part of the original lease. So, that\u2019s something you have to bear in mind, as well.
\nBrad:<\/strong>\u00a0 Yes, and it does break down more regularly, and that\u2019s being nice. But generally, people, when they don\u2019t own the furniture are probably not quite as careful with it sometimes, so it\u2019s likely to break down.
\nYes, because you\u2019ve provided it as part of what they\u2019re paying the rent for, you have an obligation to replace some of those things, so it can become a bit more expensive. But in the right area, sometimes you can get really good rent for a furnished property.
\nKevin:<\/strong>\u00a0 Yes, you have to balance that out for yourself, that\u2019s for sure. Brad Beer there from BMT Tax Depreciation.
\nBrad, thanks for your time.
\nBrad:<\/strong>\u00a0 Thanks, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

A common question asked by investors is whether to rent their investment property furnished or unfurnished. 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