Swimming pool depreciation benefits - The ultimate guide to owning a pool in your investment property
- Posted By Mark Seeliger
First published 14 January 2025
Thinking about installing or maintaining a pool in your investment property? While pools offer a great lifestyle benefit, they come with unique responsibilities and financial considerations. In this guide, we’ll break down the pros and cons of owning a pool as a landlord, plus the potential swimming pool depreciation benefits that could help boost your return on investment.
Pool safety compliance: What you need to know
As a property owner, pool safety is your responsibility, and failure to comply with regulations can lead to hefty fines and serious liability risks. Ensuring that your pool is up to code is a crucial first step before leasing or selling your property.
Common safety regulations across Australia:
- Fencing: All pools must be surrounded by compliant safety fencing, which must be at least 1.2m high.
- Gates: Pool gates must be self-closing and self-latching to prevent unsupervised access.
- Signage: Safety signs indicating CPR procedures are required in some states.
- Inspections and certification: In many states, pools must undergo periodic safety inspections to receive a Certificate of Compliance.
In New South Wales, for example, landlords must obtain a Swimming Pool Certificate of Compliance before selling or leasing a property. This ensures the pool meets all legal safety standards, including the correct fencing height and proper gate mechanisms.
Failure to comply can lead to serious penalties, so it’s essential to check your state or territory’s requirements. Visit your local government’s website or consult a pool safety professional for the latest information.
The financial benefits of swimming pool depreciation
One of the key financial perks of owning a pool in an investment property is the ability to claim depreciation. Pool assets - such as the pool itself, fencing, filtration system, and heating - are considered capital works, meaning they can be depreciated over time, reducing your taxable income.
The following graphic provides examples of some of the structural items which can be claimed as a capital works deduction and some of the easily removed assets which can be depreciated as plant and equipment.
The depreciation deductions in this example have been calculated using the diminishing value method. An immediate write-off and low-value pooling has been applied to applicable items. Capital works deductions have been calculated at a rate of 2.5 per cent.
As you can see, there are $2,874 worth of deductions in the first financial year alone for the owner of the property.
Tip!
To maximise your deductions, make sure to get a tax depreciation schedule prepared by a qualified quantity surveyor, such as BMT. We have completed almost 1 million property depreciation schedules and will ensure that every eligible component of your pool is accounted for.
How pool maintenance impacts your bottom line
Maintaining a pool can be a significant financial commitment. As a landlord, these ongoing costs can quickly add up, potentially cutting into your rental income. However, proper maintenance is essential not only for tenant safety but also to maintain the value of your property.
Typical pool maintenance costs:
- Chemicals: $200 to $800 annually, depending on the type of pool.
- Filtration system maintenance: $150 to $300 annually to keep the system in good working order.
- Electricity costs: Running a pool pump can cost between $600 to $1,000 per year.
- Repairs and replacements: Unexpected costs, such as replacing pumps or fixing leaks, can vary widely.
Insurance considerations
In addition to ongoing maintenance, a pool may increase your landlord insurance premiums. Insurance companies see pools as high-risk assets, potentially increasing your liability coverage. Be sure to contact your insurer to check whether your current policy covers pools and what additional costs you might incur.
Do pools really boost rental demand?
You might be wondering whether a pool will attract more tenants and increase rental income. The answer largely depends on location and target audience.
Factors affecting rental demand:
- Location: Properties in warmer climates, such as Queensland or northern New South Wales, are more likely to attract tenants who value having a pool.
- Demographics: Families with young children or affluent renters may be more inclined to pay a premium for a pool. However, pools may deter other tenants, such as singles or older couples, due to the perceived maintenance burden.
In many areas, pools are seen as a luxury that can boost rental demand, but they don’t always translate to higher rental returns. It’s important to assess whether the cost of maintaining the pool outweighs any potential increase in rental income.
Tenant responsibilities: Maintenance and upkeep
While landlords are responsible for the major aspects of pool safety and compliance, tenants often share the responsibility of keeping the pool in good condition. It’s important to clearly outline maintenance expectations in the lease agreement to avoid disputes down the line.
Typical tenant responsibilities:
- Regular cleaning: Tenants should be responsible for cleaning the pool and ensuring it’s free from debris.
- Monitoring chemical levels: Tenants may be required to maintain proper water chemistry using pool chemicals.
- Notifying landlords of issues: Tenants should inform landlords immediately if there are any problems with the pool, such as leaks or malfunctioning equipment.
To make the process easier, landlords can provide tenants with essential pool maintenance tools and guidelines, ensuring they’re aware of their obligations.
Selling or leasing a property with a pool: Pros and cons
There are both advantages and challenges to selling or leasing a property with a pool. Here’s a quick breakdown of the key points:
Pros:
- Attractive to tenants in warm climates: A pool can be a significant drawcard for properties in regions with hot weather, potentially increasing rental demand.
- Depreciation benefits: Claiming swimming pool depreciation can offset some of the costs associated with installation and ongoing maintenance.
- Appeal to families: Families with children often view pools as a valuable lifestyle feature, which can make your property more desirable.
Cons:
- Increased maintenance costs: Pools require regular upkeep, which can be time-consuming and expensive, particularly if the tenant doesn’t take care of the pool properly.
- Higher insurance premiums: Pool ownership often leads to higher insurance premiums, cutting into potential rental profits.
- Limited appeal: Not all tenants are interested in maintaining a pool, which could limit your rental market or even result in longer vacancy periods.
The bottom line
So, is a pool worth it for your investment property?
Whether owning a pool in an investment property is worth the cost depends on a variety of factors, including location, tenant demographics, and your willingness to handle the associated expenses. While pools can add appeal and increase rental demand in certain areas, they also come with significant costs and responsibilities that need to be carefully considered.
From a tax perspective, claiming depreciation on your pool can be a financial game-changer, helping you recover some of the costs and improving your overall return on investment.
Ready to maximise your investment property’s tax benefits? Contact BMT Tax Depreciation today for a free, no-obligation estimate on how much you could save through claiming swimming pool depreciation. Call us at 1300 728 726 or Request a Quote to get started.