What tax deductions can you get from a swimming pool
My grandfather would always say “the best pool is someone else’s – they have to maintain it, but you get to swim in it”
It was as true back then in the 90’s, as it is true now. Maybe even more so
I personally spend around $165 every 6-weeks to have our pool maintained. That’s over $1,400 per year in maintenance costs alone. The electricity to run the pumps is even more.
Note: Further down the page I’ve included a breakdown of the deductions available to you for a pool just like mine. Right down to the exact costs I paid for things like the pool, pool equipment, decking, fencing and more.
But at least when you have a swimming pool in your investment property you can claim the running costs – and original construction costs – as tax deductions.
Here’s how it works:
Claiming tax depreciation on swimming pool construction
Firstly: there’s above ground pools and inground pools.
Both can be claimable as tax deductions but it depends on three factors:
- When they were installed
- What they’re made of
- When you first used them as part of your rental property
I’ll break that down for you…
When your pool was installed
If your pool was installed before February 26, 1992 you cannot claim tax deductions for the original construction costs of your swimming pool.
But you can claim deductions for any structural improvements made to the pool after that date.
Underpinning to fix a subsiding pool is a common claimable deduction on older pools.
What the pool is made of
Different construction materials have different effecitve lives, or expected lives, according to the ATO.
A concrete pool has a life of 40-years, while a fibreglass pool has a life of 20 years and an above ground ‘temporary’ pool has a life of just 10-years
However, temporary above ground pools cannot be claimed as a tax deductible item unless you meet one of three conditions imposed by the ATO.
- Installed the pool brand new for tenant use (you’ve not used it yourself)
- have been renting out the property since a date prior to 1 July 2017
- Own the property in a company name (different rules apply to you)
Meet at least one of those criteria and you can claim the tax depreciation deductions on a temporary pool.
Meet any of those criteria and you can also claim the tax depreciation deductions for the plant and equipment items as well!
Swimming Pool Depreciation Rate
As mentioned above, swimming pool depreciation rates vary according to the construction material.
- Concrete Swimming Pool Depreciation Rate is 2.5% pa over a 40-year life
- Fibreglass Swimming Pool Depreciation Rate is 5% pa over a 20-year life
- Aboveground Temporary Pool Depreciaiton Rate is 10% pa over a 10-year life
When you first used them as part of your rental property
If you offered your property for rent after 1 July 2017 and it is not owned in a company name, then you cannot claim deductions for non-capital works items (division 40 items known-as plant and equipment).
My caveat: any replacement plant and equipment items you buy after the tenants move in can be claimed as tax depreciation deductions- so long as they were purchased brand new.
Some examples of replacement items you can claim are:
- Replacement pool pumps and chlorinators
- Replacement kreepy krawlie
- Replacement leaf scoops
- Replacement pool cover
Regardless of when you offered the property for rent, you can still claim 2.5% pa of the construction cost of your swimming pool (so long as it’s newer than 26 February 1992).
Claiming Tax deductions for swimming pools in body corporate arrangements
When you own a property within a Body Corporate arrangement – and you have access to a communal pool – you can also claim your share of the pool as a tax deduction each year.
All you need do is have your quantity surveyor measure up the communal pool(s) to determine their overall value. Then divide this value by the lot entitlements share.
Claiming tax Deductions for pumps, pool covers and general pool equipment
When you have a pool you also have pool equipment and accessories.
- Pool pumps and chlorinators
- Solar heaters
- Pool nets
- Kreepy Krawlies
- Pool covers
These plant and equipment items are typically claimed within the Division 40 schedule, either in the Low Value Pool or the Prime Cost & Diminishing Value spreadsheet
Tax Depreciation for Pool Fencing
Pool fencing is a fixed and permanent structure. In the pool fencing legislation there’s no such thing as temporary pool fencing. Other than the one the pool builder erects while under construction. And he owns it so you can’t claim it.
As such; you can only claim pool fencing as a capital Works item (division 43) at 2.5% pa.
However, yearly repairs and maintenance to the fencing is claimable at 100% instant asset write-off as it is classed as repairs and maintenance under ATO tax legislation.
Pool safety inspections and certification
When you are required to get your pool fencing compliance tested by a pool fence certifier you can also claim the cost as a tax deduction.
And as this is considered a maintenance item under ATO tax legislation you can claim the cost as a 100% write-off in the financial year the expense was incurred.
Pool Maintenance Tax Depreciation
If you’re paying for a pool maintenance company to service your investment properties swimming pool (like I do) then you’ll be able to claim the cost as a tax deduction.
Now, you won’t need to include this cost in your tax depreciation schedule as it’s considered a maintenance item.
This means you can claim each invoice as a 100% instant write-off cost.
All you need do is keep track of your invoices and provide them to your accountant when losing your annual tax return.
Real Life Example of How Swimming Pool Deductions Work
As promised. Here’s how my own swimming pool breaks down for tax depreciation deductions.
This is the pool ‘shell’ and is claimable at 2.5% pa of the original construction cost
With my pool, the shell cost $23,440. This included the full installation of the shell and running pipework & electrics from the pool to the side of the house where the pumps will be installed
The shell is claimable at 2.5%pa (when in a rental property)
That means $23,400 x 2.5% = $586/yr in tax depreciation deductions
Pumps & Equipment
I went with the tried and tested Salt/Chlorine based system and the pumps cost an additional $4,350 including installation/
Assuming I’d installed these pumps brand new at my investment property, I’d be able to claim the depreciation on them at 10% pa in the Prime Cost calculations – or – 20% pa if using the Diminishing Value method.
Pool Nets, Brooms & Covers
I spent $350 on a pool cover and $227 on nets and brooms. And yes, you can claim the depreciation on these items too. And as they’re typically under $1,000ea in cost you can claim them as Low Value Pool items.
This means you get to claim the depreciation at 18.75% in the 1st financial year and 37.5% each and every year thereafter – until fully depreciated down to $0
Plus: Some items will be under $300, which you can claim as an instant asset write-off at 100%
Like my brooms and nets which cost me $227. I could claim them as an instant asset write off at 100% in the first year.
Pool Fencing and Gates
I spent $1,500 on my pool fencing.
This is claimable at 2.5%pa (as it’s a structural item).
But… i removed that fence after just 1 year to do an upgrade.
In this case, the remaining value of the fence $1,462.50 ($1,500 – $37.50 = $1,462.50) is able to be written off at 100% as a scrapped item.
I then installed a new glass fence for $3,300, claimable at 2.5%pa.($82.50/yr)
Pool Decking Deductions
To make the pool user friendly, we had a timber deck built around it. This cost $17,787 and is claimable at 2.5%pa (if in a rental property). This would add another $444.67/yr to the annual tax deductions
Total tax Deductions on our Pool
- First Year …$2,174
- Second Year …$4,005
- Third Year …$2,007
If you found this helpful, you may also find some of my other articles beneficial too. And to see some real life examples of what our clients have been receiving in tax depreciation deductions, check out our Client Portfolio page here>