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Federal Budget Cuts to Superannuation Contributions Cuts Open Renovation for Retirement Door
Summary

20/05/2009

Archicentre News Release

20 May 2009

Federal Budget Cuts to Superannuation Contributions Cuts Open
Renovation for Retirement Door

One million baby boomers set to retire in the next ten years who have had their potential superannuation contributions slashed by 50% from $100,000 to $50,000 in the Federal Budget could turn to renovation to try and boost the value of their main asset - the family home.

Framing and electrical wiring in a property renovation

Archicentre, the building advisory service of the Australian Institute of Architects said renovation had a three fold advantage for baby boomers - investment in the family home does not attract capital gains tax when it is sold, people get to enjoy a better lifestyle and could take the opportunity to turn part of their home into a future revenue stream by creating a self contained living area for rent.

Robert Caulfield, Managing Director of Archicentre said, "Renovating for Retirement required careful planning with the renovation design being clearly matched to the long term aim of producing revenue either in the form of rent or capital gain.

"Apart from the design, accurate paper work for tendering and project management is needed to ensure the project comes in on budget to maximise the investment potential.

"Home owners need to recognise that renovating for profit to build a retirement nest egg is similar to running a business where costs and profits need to be managed accurately and constantly monitored."

Mr Caulfield said Archicentre finds many retirees who set out to renovate for retirement run into problems by purchasing a home for renovation without having it checked professionally only to find that they have purchased a lemon with faults that require thousands of dollars to repair before they start.

"Another problem which can occur is if the purchased property structurally or by its design is not suitable for renovation. This can become more complicated if the property is zoned under local government heritage planning schemes making it difficult and costly to gain planning and building permits.

"Providing people do their homework, a well designed and managed renovation project that is completed on budget can create a major boost to a retiree's assets.

"The opportunity to develop a separate independent living area as part of the renovation that can be rented out is a strategy that can provide the retirees with extra income from their home when they are at a stage of downsizing or presents a value added aspect when selling the property.

"Such a strategy requires careful planning to design the extra toilet, bathroom, kitchen and laundry facilities which can be carefully planned into a renovation.

"The design and compact nature of these features have been refined in the past decade as part of the apartment revolution."

Mr. Caulfield said that with the current economic climate with low interest rates and the increasing lack of work in the building industry there has never been a better time to renovate.

"People should take professional advice from their accountant as a first step in undertaking the renovation for retirement strategy to ensure their taxation and investment situation is appropriate.'

Design Renovations to Suit your Bank Balance

The starting point for any successful renovation is developing the design to suit both your lifestyle needs and your bank balance. It is no good heading off into a renovation without having your costs tied down.

Many people use the Archicentre Design service as a starting point to work out their ideas and costing at a preliminary stage.

A design concept is a great way to kick-start a building project. In this stage, an architect produces a creative design that explores a range of renovation possibilities.

A design concept might include sketches, suggestions, cost estimates and also address the effects of local planning guidelines and building regulations.

Most architects work with any particular building style and show care and sensitivity to circumstances, lifestyle and budget.

A well-considered design concept should include:

A sketch of the existing floor plan and a carefully-considered design concept, perhaps with some alternative ideas

Clear directions on how to undertake the project.

An opinion of the probable cost of the building work.

Recommendations on the best way to get your project built.

Most importantly, architects can cater for short, medium and long-term needs with a staged plan.

The key to a successful Renovate to Retirement project is planning and affordability.

Archicentre has a free information fact sheet for download - Master Planning Your Renovation - click link to download.

www.archicentre.com.au

Media Enquiries:
Robert Caulfield Managing Director Archicentre (03) 9819 4577 Mobile: 0412 381 306
Ron Smith Corporate Media Communications (03) 9818 5700 Mobile: 0417 329 201

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