Putting in a new kitchen - before or after settlement?

[MickInvestor]

I have an offer in on my first IP It needs a new kitchen and I am not sure when I should put it in i.e. should I put it in just prior to settlement even though I won't technically own the property or wait until after settlement. If I wait until after settlement would I put a tenant in and then put a new kitchen in or should I put the kitchen in and then put the tenant in?

I would prefer to start getting rent as soon as settlement has occured so I don't lose a weeks rent while I put the kitchen in.

Also as the existing kitchen is in really bad condition could this be classed as a repair and therefore fully tax deductible if I wait to have a tenant in before I put the kitchen in?

Your advice would be greatly appreciated

 

[chrispy]

Don't put it in before settlement as you do not own the property, if anything goes wrong you have done your money.

If you put the kitchen in as soon as you take over the property, then put in a tenant, it is classified as initial repairs and therefore a capital item. If you believe you will have capital gains on this property, this is not a bad thing, as it adds to the capital cost.

Chris

 

[Bargain Hunter]

I would prefer to start getting rent as soon as settlement has occured so I don't lose a weeks rent while I put the kitchen in.

You can do the work prior to settlement if the vendor agrees but as Chrispy points out there is a risk that you could do the dough.

If you wait until setllement it doesn't really matter when you replace the kitchen, either you lose money now or somewhere down the track as it is unlikely that you will be able to replace it with a tenant in place.

Replacing the kitchen is a capital expense not a repair.

Regards

Andrew

 

[MickInvestor]

Thanks Andrew and Chrispy

 

[Ausprop]

there's no way i would touch it before s'ment... seen too many that just never get settled

 

[bradje]

Get all the tradies etc organised for the moment u own it. Should take less than a week with the right elbow grease and organising and no sleep
Then place the tenants in

JB

 

[knightm]

I agree do it after settlement, less risk, but plan it really well prior so it all happens in the week after. If you are spending several hundrek k on a property and several thousand on a kitchen, you can afford a few hundred on 1 weeks rent! Just build it in to the cost of the renno. The main thing is to plan well so the week does not become a month or two

Congrats btw on number 1!

 

[stumunro]

organise everything before settlement, including finding a PM to look after your property and to put the feeler out for tenants!

Day of settlement get the tradies in, as you will find something will always go wrong, if you plan a 1 week job, make allowance in case it takes 2 weeks (wrong parts ordered in / tradie sick etc.)