Investment Property Security Alarms: Income Tax And Insurance Benefits For Property Investors

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Property investors and landlords have much at stake when it comes to protecting their assets

. Their livelihoods depend on making sure that their houses, apartments and properties are safe from loss. Installing security alarms on rental & investment property makes business sense, and provides more than just home protection.

So, besides increasing security, what are the insurance benefits and tax breaks a property investor can claim? Let's look at these two financial incentives landlords and property investors have for installing security alarms in the investment properties they own.

1) Saving Money on Property Insurance, Contents Insurance or Landlord Insurance

It can be difficult, particularly in the current economy, to profit on investment property. Some property investors may view a home alarm system as "just another home improvement cost," particularly when faced with other maintenance and upkeep costs.
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However, landlords and property investors should be aware that properties with home alarm systems may have lower home insurance, contents insurance and landlord insurance rates. Property crime (like burglary) costs Australian insurance providers millions of dollars annually, and an estimated 350,000 to 450,000 homes and properties in Australia experience crime every year. You can bet they are on the lookout for things that can mitigate that risk.

Property crimes which cost insurance companies money include burglary, vandalism (like broken doors and windows) and graffiti. Home alarm systems are definitely an effective deterrent to would-be property criminals, as homes and properties with security alarms are targeted less frequently by criminals than those without a home security system.

In fact, the benefits may go even further. A study by Rutgers University indicated that "a burglar alarm...not only protects the home without displacing burglary to nearby houses, but, in fact, also provides these other houses with protection from burglars" as a side-benefit.

Insurance providers must pass on the cost of property crime to their customers. To avoid burdening their clients with that cost, they prefer to reward customers who are proactive in trying to prevent property crime in the first place. That's why many insurance providers offer discounted insurance rates on investment property and houses that have security alarms installed - the perceived risk to them is less.

The rate of insurance discount varies according to a number of factors. Security alarms usually need to fit specific criteria as defined by the insurance provider. These criteria may include home alarm system type, where sensors are placed in the home or property and whether the system is security company installed. Your property insurance company may also require that any alarm systems be monitored back to base by a security company.

Check with your property insurance provider before you purchase, install or upgrade security alarms on your investment property. Your company will be able to provide you with the right details. Home alarm systems that don't meet those specifications may not be eligible for discounts.

It's also important to make sure that your security company understands what your insurance provider expects. Insurance companies want to be sure that home alarm systems are installed properly before offering you a discount. Be prepared to provide your security provider with a copy of these specifications if needed and check their website to see if the security alarms they install can meet insurance requirements.

You'll probably also need to keep your security alarms maintained in order to keep getting your annual discount. Annual alarm "tune-ups" have a small cost when compared to the insurance savings. You can check with your insurance provider for details on security alarm maintenance requirements. To help you remain insurance-compliant, security companies may offer deals that will help you save money on your security alarm service calls.

2) Installing a Home Alarm Can Help Landlords Receive Income Tax Deductions

Did you know that the purchase and installation of home alarm systems for investment property can sometimes be written off as a business expense, just like other home improvement or renovation costs? The alarm installation, alarm service calls, and alarm monitoring costs may all be eligible as property improvement expense deductions on your tax return.

Landlords and investors should check with their accountant for specific details regarding tax write-off eligibility. Tax breaks, like insurance discounts, usually depend on meeting specific criteria (in tax law). Spending a little bit of time researching may save hundreds or even thousands, so just like in buying a property, it really pays to do your research.

Back to Base Alarm Monitoring for Your Investment Property

An important thing to remember when installing an alarm: security alarm monitoring may be crucial for insurance purposes, not to mention your own peace of mind. Varying levels of service are available, depending on your needs. Packages typically cover 24-hour, 7-day service to ensure that regardless of the time of day or year, someone is always looking out for your property and valuables.

Basic packages include having a security representative phone whenever an alarm is tripped. Make sure that your alarm monitoring control room is Grade 1A, meaning that police may be summoned under certain conditions, particularly if the premises is considered high-risk.

Alarm monitoring packages can be tailored according to your unique needs. They may even vary from property to property in your portfolio, since different dwellings require different levels of security.
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In Conclusion

Property Investors who decide to add security alarms to their investment property should document their purchases. Save all receipts and proof of installation. Also, make sure the documents you receive contain information about the type of alarm being installed - there are may different brands of home alarm systems.

As a busy property investor, you of course have much to attend to already. Contact a security company you trust and see what they can do to help shoulder the load of looking out for your assets. This small amount of work can net a significant reduction in your expenses while providing you with the certainty and peace of mind you need - and deserve.

by: Mark Pendergast

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