The Perks of Buying Off-the-Plan
Ever seen a great-looking image of a property with an even better-looking price? Chances are you have been looking at an off-the-plan property!
Buying ‘off-the-plan’ basically means entering into a legally binding contract to purchase a property before it reaches the stage of final development and occupancy approval. So in other words, you are buying a promise – a promise that the seller will complete the development of a property in accordance with agreed terms.
This ‘promise’ may sound daunting, but in the long run there are many good reasons to buy a property based on figures, artist’s impressions and display suites (and increasingly virtual reality walk throughs).
Here’s some food for thought…
1. Buys you time to save for the payment
Buying off-the-plan is one of the easiest ways to get into the property market.
You only need a 10% deposit today and can pay the balance of the purchase price at settlement, once construction is complete, which may take 18-24 months.
Savvy buyers use this time to save towards moving costs, furniture, the home and the house-warming party.
2. Stamp Duty savings
“One of the well-known and biggest reasons for buying off-the-plan property is the potential for huge stamp duty savings,” says David Milton, Managing Director at CBRE Residential.
“For example, in Victoria you could potentially save over $18,700 on a $500,000 purchase if you purchase a new off-the-plan property instead of an established property.”
Stamp duty can burn, especially when you’re a first timer, so ways to save are very welcome.
3. Depreciation Benefits
If you’re buying off-the-plan as an investment and plan to lease your new home to renters, you may be eligible for 1000s of dollars’ worth of tax deductions, Milton says.
Get a full depreciation schedule from a quantity surveyor once your property settles.
This will assist at tax time when claiming deductions for your new asset’s brand new fittings and fixtures.
“Increased depreciation means your holding costs will be much lower as the tax man is covering a bigger portion of your investment property expenses.”
4. Repair cost savings
It goes without saying that a brand new home – if well built – will not need the ongoing maintenance that an older property often needs. Plus, you have the luxury of moving into a property that is totally brand new!
5. Lower Power Bills
“Changes to the Australian Building Code mean new properties must meet stringent energy efficiency requirements”, explains Milton.
Your off-the-plan home should be fitted with some of the most power-saving appliances and gas/water/electricity systems on the market, which is a boon for owner occupants and future tenants alike.
When you buy off the plan you lock in the sale at the current market price and while you wait for construction to complete the value of your property may have increased along with the market. So when it comes time to settle you still only pay the original agreed price, although now the property is worth more. “We have had many purchasers that have made a deposit and by the time they need to settle, their property has gone up between $40,000 and $100,000”, adds Milton.
So now is the time to do your homework, get past that initial fear and you may just find what you need.
Considering buying brand new? Browse CBRE Residential latest off-the-plan properties here.