Why Buy New?

What is ‘Buying Off-The-Plan’?

Buying off the plan is when you sign a contract to buy a property or apartment that is yet to be built. Without a physical property to inspect, buyers base their decision on plans and artistic renderings of how the house, unit or apartment might look, in addition to information about the builder, developer and project.

This often, but not necessarily, means ‘before it’s started to be built’. However, even if the property is well on its way to being finished, it’s still technically an off-plan purchase.

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Why Buy New? | Blaq Property | Off-the-Plan Specialists

What Are The Advantages To Buying Off-the-Plan?

The main advantages to buying off the plan is that you agree upon a purchase price before the building is completed, and generally only need to offer a small deposit. In theory, this means that you could pay a lot less for a property than it’s worth by the time it’s completed, as property prices could increase significantly during the time it takes for your builder or developer to complete the build of the house/unit/townhouse or apartment.

It’s a fairly logical assumption, given how property prices generally tend to go up over time.

Getting in early may also present opportunities to secure offers from developers who often require minimum sales before the project is fully financed.

Additionally, the areas that are offering off-the-plan packages are ‘Developing’ and in a growth corridor that is expected to increase in value as more builds and infrastructure are completed.

And it’s also not the only advantage to buying off the plan…

Stamp Duty Discounts

Buying off-the-plan saves purchasers a lot of money on stamp/land transfer duty, as most states offer greater discounts on newly-constructed properties. And in the case of houses or units, if a buyer signs a contract before construction begins, stamp duty will only apply to the land value and not the building contract price.

For example, in Victoria, you could potentially save over $18,700 on a $500,000 purchase if you purchase a new off-the-plan house or unit instead of an established property.

Some States offer further Stamp Duty Discounts or Exemptions for First Home Buyers and Owner Occupiers, whether it’s a house, unit OR apartment they are purchasing.

Your mortgage broker will provide information on what stamp duty is due depending on your circumstances and on where the property is located.

Near-Perfect Condition

Secondly, because they’re brand new, these properties will be more energy-efficient and unlike older properties, you won’t need to shell out as much on repairs and utility bills in the months and years ahead.

Changes to the Australian Building Code mean new properties must meet stringent energy efficiency requirements.

Your off-the-plan property should be fitted with some of the most power-saving appliances and gas/water/electricity systems on the market, which is a big plus for owner occupiers and future tenants alike.

Offers Buyers More Time

Buying off the plan gives you a bit more time to get your finances in order, as you’ll generally only need to put down a 5% – 10% deposit to secure the contract, and you can use the extended land settlement & construction time to save more funds towards the outstanding settlement balance.

It also gives you time to sell another property and have the sale funds from that to contribute towards settlement.

Tax Benefits for Investors

If you’re an investor who plans to lease out the property, buying a brand new property off the plan allows you to maximise the tax deductions available to you via depreciation.

Depreciation is one of the best tax breaks available to property investors and can amount to significant savings.

A quantity surveyor prepares a depreciation schedule which makes it far easier for you to claim deductions on your property fittings and fixtures at the end of the tax year.

Increased depreciation means your holding costs will be much lower, as the taxman is covering a bigger portion of your investment property expenses.

Generally speaking, there are two types of depreciation allowances available to investors:

  • Depreciation on building allowance.

  • Depreciation on plant and equipment.

Building allowance is the deduction available on the building structure (for example, concrete and brickworks) and is commonly known as the building write off.

Plant and equipment, on the other hand, is the allowance for removable items within the building itself. Things like ovens, dishwashers, and carpet, and even your garbage bins.

A depreciation schedule is a detailed document that includes:

  • A breakdown of all building allowance costs.

  • A breakdown of all plant and equipment costs.

  • The rates at which you can claim different items and the effective lifespan estimate of each item.

  • A breakdown of how much you can claim per annum based on the financial year end.

A good report will break down your plant and equipment depreciation by two methods: the diminishing value method and the prime cost method, which give you different options for claiming depreciation on your assets depending on your needs.

The cost of having a Depreciation schedule prepared is 100% tax deductible

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