11 BENEFITS OF BUYING OFF THE PLAN
as published in coronation.com.au
There are many great reasons why buying off the plan could become the best investment decision you make. Here are 11 of the most compelling.
STAMP DUTY BENEFITS
Stamp duty (also referred to as transfer duty) concessions are a major perk of buying off the plan. While concessions vary from state to state, common examples are:
Extended payment periods
In some cases, buyers can defer payment by 15 months instead of three.
First Home Buyer concessions
Eligible first home buyers do not need to pay stamp duty on new homes under a certain value. Check with a mortgage broker or your local state government for the latest concessions and eligibility criteria as they differ from state to state and are subject to change.
AVAILABILITY OF GOVERNMENT GRANTS
As with stamp duty, most state governments have grants designed specifically for first home buyers purchasing new homes (which includes off the plan developments). These grants are designed by the government to promote growth within the construction sector.
We also recommend that you talk to a mortgage broker to find out exactly what grants and concessions you are eligible for.
SUBSTANTIAL TAX ADVANTAGES
As off the plan properties are brand new, you can claim depreciation, which allows your accountant to calculate a dollar amount for wear and tear (and the subsequent loss in value) on your property and deduct it from your tax bill.
This is a major tax advantage, reducing the ongoing costs that come with owning property and allowing you to expand your portfolio quicker. We recommend also speaking to an accountant, financial planner and/or mortgage broker to work out exactly how a new home can save you tax, taking your personal situation into account.
THE PRICE IS LOCKED IN
When you buy off the plan the price is locked in, no matter what happens in the market. By the time you settle (which could be 24 months later, for example), the value of your property could have increased by $50,000 or even $100,000. But you don’t have to pay a cent more and can take advantage of this capital gain to continue building your property portfolio.
HIGHER RENTAL YIELDS
New apartments are far more popular with renters than older options. This means owners of new apartments can charge higher rent and will be able to rent them out faster. Less time on the rental market and higher prices mean a much better rental yield.
TIME TO SAVE
When you buy off the plan, you only need a 10% deposit, which gives you more time to sort out the rest of your finances. Having committed to the purchase, you’ll be far more motivated to save than if you were simply waiting for the right apartment to come up. You can also use the next 24 months (or however much time remains until construction is finished) to carefully plan what you’ll do with the property once it’s completed.
GETTING IN FIRST
The first people to buy in a development get their pick of the best apartments. The best views, the best layout, and even those likely to have the best rental returns or capital growth.
They are also likely to get a better price, as most developers discount the first apartments in order to generate interest in the project.
MINIMAL MAINTENANCE
Brand new homes not only look beautiful, they also bring down maintenance costs. New developments are designed to be easy to maintain, and new buildings, fixtures, fittings and appliances mean that you’re not going to be dealing with appliances breaking down or wear and tear for a long time to come.
PERFECT CONDITION GUARANTEED
When you settle on an apartment, you will have an opportunity to inspect it for any issues or defects. This process isn’t anything to be worried about – when a building is completed, a number of contractors have come through to install lights in every apartment, paint the interiors, install the kitchen appliances, do carpeting, install locks among many other things.
When you’re operating on such a large scale, it’s not uncommon that there’s a light fitting missing a bulb, the oven technician has scratched the wall. It’s a simple process of identifying any of these kinds of issues and logging them with the developer, who will make sure to fix them before you move in. Your contract will also include a warranty that will cover faults and issues for a predefined period.
It’s worth looking for developers who build and manage their properties, and who have an on-site property management team to help you manage any maintenance issues.
A CUSTOMISED LOOK
When you purchase an apartment, you’ll be able to choose the finishes. Most projects will include at least two colour schemes, and some will have upgrade packages available – high end cookware or different coloured taps. These are always on show in the display suite – be sure to ask about them when you enquire on a property.
REDUCED POWER BILLS
New developments are designed by some of the finest architects using the latest technology. They are carefully planned to be ultra-efficient, being fitted with the best insulation, energy efficient appliances, and large windows to maximise natural light. Not only does this minimise your power bill, it also minimises your environmental impact.
It may take a while for your apartment to be ready, but the perks that come with buying off the plan can make the wait more than worth it.
Purchase off the plan. Practice patience. Procure the perks.