A new build, a renovation or a well-established home in good condition. We explain the pros and cons of each.
Planning and research
If you’re planning an extensive renovation with plenty of structural changes, it may be cheaper to start from scratch or buy elsewhere. You also need to consider the age of the home, its location and the lifestyle offered as part of the decision making.
To kick-start your research, check out the Archicentre website for their Cost Guide, which can help you calculate the cost of a home improvement project, a renovation, a new home or a small property development. Archicentre is the building advisory service for the Australian Institute of Architects. Costs can vary and it’s a good idea to keep in mind that renovation costs could blow out due to unforeseen problems that could arise along the way.
One of the advantages of building a new home is you may ask your builder for a ‘fixed price contract’. Once you have a fixed price, you can then compare it to the cost of moving into a bigger home. This will include the difference between the price of the bigger home and your current home and the transfer costs such as stamp duty, legal fees, removalist costs, pest and building inspections and insurance.
Budget for renovations
A renovation is the right choice if you’re happy with your current property and locality and don’t want to move. As an added plus, a renovation won’t involve stamp duty charges and there are no real estate agent fees to contend with. And depending on the nature of the works (and unlike a rebuild), you may not have to move out of your home while the renovation is progressing. You simply work and live around it.
Something else to consider when renovating is that it can potentially be very expensive. Many people also find that renovations can take longer to complete than originally planned – and also cost more.
Cost blow-outs can occur where unexpected problems with the home’s condition arise that need to be fixed. Also, many owners tend to make adjustments and additions to the original contract of works with a builder. These adjustments can often hike up the costs as the renovation proceeds.
Securing a number of building quotes and then keeping a lid on costs once the renovation gets underway can produce the best financial outcome for homeowners.
Centrelink aged pension eligibilty
Your home is not counted as an asset when calculating pension or payment, but it does affect how your pension or payment is assessed under the assets test. If you are a homeowner your asset value limit is lower than someone who does not own their residence.
Making improvements or renovations to your home will help to increase the resale value and may also help to increase your entitlements as the asset is non assessable.
On the flip side, if you are downsizing and have surplus funds after the new purchase- this will go towards your Centrelink assessment and be deemed for both income and assets.
There is also recently introduced legislation that allows Retirees to place excess contributions from the sale of a property into their superannuation outside the traditional contribution caps where eligibility is met.
If you would like to discuss what options are available for you and what works best for your situation, please contact our office on (02) 9188 1547 or email email@example.com