Property investors and homeowners filing their returns this tax season should be wise in spending any refunds they will get, says an expert.

Lloyd Edge, director of Aus Property Professionals and author of Positively Geared, said Australians receiving a refund should consider spending it on value-boosting strategies instead of just letting the money sit in their bank accounts.

"For Australians who already own property then investing funds to update the property would be of great benefit," he told Your Investment Property. "From as little as a couple of thousand on your tax return would be enough to make a start to some upgrades on your property."

Also read: Tax Guide For Landlords

Quick fixes to boost value

Edge said a general paint job would make a huge difference, as well as updating the floor and window coverings. Doing these will not only increase the value of the property but also boost rental yields.

While the kitchen and bathroom areas are well known for increasing the value of a property, Edge said these rooms are typically expensive to renovate.

"Depending on your tax return, upgrading, not replacing these wet areas would be much more cost-effective. You can replace the benchtops, cabinetry handles, and even paint the tiles, or replace the kitchen splashback," he said.

Investing in regional areas

Edge said it is also a good idea to use tax refunds in building a deposit for a home purchase in regional areas.

"If you found some friends or family to do a joint venture with, you may be able to pool together returns of $5,000 or $10,000 each to get a deposit together to buy a property and get onto the ladder. You can buy a well-located regional property with as little as a $30,000 deposit plus costs," he said.

Aside from affordability, Edge said regional properties have higher rental yields, which will be essential to maintain cash flow and improve serviceability.

However, he said investors should still look for properties in well-located regional markets.

"It's all about where people want to live so therefore you should be targeting areas with low vacancy rates. Regional markets that are good for investing are New South Wales' Newcastle, Orange, and Armidale; Queensland's Sunshine Coast; and Victoria's Geelong, Ballarat, and Bendigo," he said.