As a significant lifetime investment for most Australians, real estate is often touted as being a relatively safe investment that also serves a practical purpose: serving as a primary residence or generating rental income from tenants. Dual income properties are seemingly ubiquitous these days, and for very practical reasons as well. But can they add value to your property?
01. Rental Income Yields
Whereas a single detached home is generally used as a primary residence or rented to tenants, dual income properties can do one or the other, or both. Moreover, with a greater demand for privacy and households being significantly smaller than they were a few generations ago, smaller self-enclosed rental units may be far more appealing to tenants and therefore command higher rental yields from single individuals, young couples, or perhaps small families.
The versatility of dual income properties makes them equally versatile in terms of achieving optimal returns on investment, which in and of itself can add perceived and (real) appraised value.
02. Efficient Land Use
For the boomer generation, homes got bigger and bigger and in many cases were a flagrant display of wealth moreso than being fully utilised (of course, this is painting with broad brush strokes). Younger generations, whether out of choice or necessity, are increasingly seeking smaller and more affordable properties to live in, dovetailing also with the low fertility rates and people entering relationships or marriage much later on in life.
Land is certainly at a premium in Australia, especially in major urban centres such as Melbourne CBD or Sydney, which is incentivising developers to maximise every centimetre of land. Better, more efficient use of land can increase the property value as nothing is put to waste.
03. A Growing Appeal in the Market
Dual occupancy properties are growing quickly in their appeal and there seems to be no signs of this trend slowing down. Since they’re adaptable and conducive to multi-generational families, investors, or for renting one and living in another unit, they draw on a large target audience of potential buyers and prospective tenants.
04. Flexible Property Usage
With efficient land use comes flexible and adaptable usage of the dwellings themselves. Owners can live in one unit and rent out the other, rent out both units, or leave the other unit for an ageing mother-in-law, for example.
Moreover, one or both dwellings can be modified in the future without necessarily interrupting living conditions in the other. Adding a patio, garage, or conservatory, for example, needn’t interrupt the lives of tenants in the other unit.
05. Tax Deductible Incentives
You may be able to claim tax deductible credit depending on your circumstances, but generally, dual occupancy properties may be eligible for depreciation claims if the build(s) are new as well as for future renovations. It is recommended that you speak with a tax accountant to ensure that you are eligible for any tax deductions, however.
In the event that you can claim tax deductibles for your dual occupancy home, such as living in one unit and renting out the other, then this can certainly but indirectly add to the value of your property as your tax burden is lowered through efficient usage.
Trevor Homes
For everything regarding dual occupancy homes, we encourage your enquiries at Trevor Homes.
