Managing an investment property means making constant decisions about maintenance and repairs. One of the most common dilemmas landlords face is whether to repair or replace an ageing fixture.
Many people face the dilemma of choosing between repairing and replacing something. The decision isn’t always easy, but factors such as depreciation, long-term costs, and tenant satisfaction can help guide you towards the best option.
When Repairs No Longer Make Sense
Let’s look at a real scenario. A tenant reports that two ceiling fans have stopped working. They’re original 90s-style fans, over 30 years old. You could call an electrician to inspect and repair them, but the callout fee alone is $165, plus another $165 for a return visit and parts. That’s already $330, and there’s no guarantee they won’t break down again in a few months.
On the other hand, replacing a ceiling fan costs about $400 when ordered from a supplier like Beacon, plus installation. In this case, replacement is the smarter financial decision. It’s a one-time cost that eliminates ongoing repair expenses.
Depreciation and the True Cost of Repairs
Before deciding whether to repair or replace, it’s important to consider the depreciation life of the item. Every fixture and fitting in your investment property has an expected lifespan, and once it nears the end, repairs become a temporary band-aid rather than a real solution.
Deductions are calculated based on opening or residual value of an asset, and depreciated through effective lives and depreciation rules as prescribed by the Australian Tax Office (ATO). Understanding these depreciation rates can help you determine when replacing an item makes financial sense. If an appliance or fixture is already fully depreciated, replacing it may allow you to claim additional tax benefits.
You can ask for insights from industry experts such as MCG Quantity Surveyors for more insights into tax depreciation schedules and how they apply to fixtures in your investment property.
How We Help You Make the Right Call
At Rubix Realty, we don’t just react to maintenance issues. We plan ahead to save landlords time and money. Here’s how we approach repair vs. replace decisions:
- We check the depreciation life of the item before advising on repairs. If it’s near the end of its expected lifespan, we recommend replacement to prevent ongoing costs.
- Our tradespeople notify us when an appliance or fixture is approaching the end of its life. This allows us to manage replacements proactively rather than waiting for breakdowns.
- We provide cost comparisons, showing what you’ll spend on ongoing repairs vs. a full replacement. This way, you can make an informed financial decision.
When Should You Replace Instead of Repair?
- The item is near the end of its depreciation life: Replacing it may allow you to claim further tax deductions.
- Repair costs are more than 50% of the replacement cost: If fixing an old fixture costs nearly as much as buying a new one, replacement is the better option.
- Frequent breakdowns are causing tenant complaints: Unreliable appliances impact tenant satisfaction and could lead to vacancy.
- It improves energy efficiency: Newer models of appliances like air conditioners, hot water systems, and ceiling fans are often more energy-efficient, reducing power costs for tenants.
Knowing when to repair and when to replace is key to smart property investment. Regularly reviewing your property’s fixtures and working with a proactive property management team ensures you’re making cost-effective decisions that benefit both you and your tenants.
If you’re unsure whether your repairs in your investment property are worth it, book a chat with Pat to discuss your investment property.
