Five hidden costs of renovating
Renovations come in all shapes and sizes and that means they come in all costs, too. Some can be major and cost tens or hundreds of thousands and some can be minor, costing a hundred dollars or so here and there. But no matter the cost of your renovation, there’s nothing worse than unexpected expenses, so we thought we’d reveal five of the major hidden costs when it comes to renovating.
If you’ve had your own experience with this then share your story in the comments below…
The problem with digging into an old home is that you might come across unexpected maintenance jobs while you’re at it. Things like electrical rewiring, plumbing, accidental errors, water damage, termites and paint chips during a renovation all need to be addressed and while you’re in the thick of it, you may as well do it now. This has the potential to add significant costs to the job that you wouldn’t have planned for. The good news is that these save you a lot in the long run, so you’re better off addressing them now.
If you’re doing major renovations and need to provide contractors with unobstructed access to the property, you’re likely to need alternative housing for your pets. Pet resorts can cost quite a bit, so it’s worthwhile checking with a neighbor, family member or friends to see if they can help out during the renovation.
If you're renovating the kitchen, making your own meals during the renovation period might be out of the question, especially if you aren't able to plug your appliances in elsewhere. In some cases, you can set up a temporary, mini-kitchen with a mini-fridge, toaster oven and camp stove so you’re still functional, but if you haven’t done that then you will need to budget for meals while the kitchen is out of action.
If you’re just renovating your own home where you live full time, you won’t have any troubles. However, if you are renovating an investment property then you need to consider what this means for tax. According to the Australian Taxation Office, you’re likely to be entering into a profit-making activity if you acquire a property with the intention of renovating and selling it at a profit, and go about it in a business-like way. This could have implications for the way the profits are taxed (as income or capital) and for GST. Your net gain or loss from the property sale after the renovation are subject to capital gains tax so you might want to have a financial planner help with your renovation model so the tax amount doesn’t outweigh the profit.
Sometimes when you have grand visions for your renovation, you can overlook the minor details like preparing the site. If there’s the requirement for machinery to have access to the course, some preparations might be needed. This is called site works and includes removal of trees, flattening land, building retaining walls and could require excavators, cranes and tractors. By speaking to a professional early on in the renovation planning process, you can get a good indication about whether or not you will require site works.
So there you have it. Plan well, budget wisely and seek professional advice whenever you’re not sure and you should be able to comfortably avoid unforeseen costs in your next renovation!