For anyone ineterested in buying property off-the-plan, here are some of the major benefits which should be considered.
Price When developers first offer their new projects to the market through our networks they usually start with lower prices to encourage a faster sales rate (which in turn enables them to obtain construction finance sooner). When construction commences, and the developer has met their construction finance requirements, prices usually rise as the profit is normally made on the final sales in the project. Therefore, there is often a good price incentive for investors who commit early to the project.
Tax depreciation As with all investment property purchases there are some significant tax advantages. These benefits are enhanced when property is bought off-the-plan because there are grounds for greater tax depreciation. Schedules can be provided at completion of the project for your accountant to utilise these benefits.
Securing property at today's price When buying off-the-plan, an investor can secure property at today's price yet often not have to settle for up to 18 months, or in some cases even longer. This means that while you'll pay a 10% deposit upon signing a contract, you don't have to pay the balance of the money until the property is complete. In the meantime, especially in a rising market, you can enjoy the benefit of any capital growth that occurs on the property. Of course if prices were to fall, which has rarely happened in most areas of Australia, and certainly not for long periods of time, you will have to wear that risk.
Stamp duty savings If you are buying off-the-plan property in Victoria and Queensland in particular there are substantial stamp duty savings available. The Victorian Government in an attempt to encourage new residential developments has reduced stamp duty if you purchase before the property is built. Once construction commences the rate of stamp duty increases until the building is complete and the full rate of the stamp duty applies. The concession is always greatest if the property is bought before construction commences.
Time If you're an owner occupier purchasing off-the-plan, you instantly have the added advantage of 'putting things in order' before you move in. Co-ordinating the sale of an existing property can be stressful, but knowing that you have some time before your new property is ready to occupy provides you with valuable time to plan for your move.
Savings If you buy property during the planning stages, or early on in construction, the extra time before settlement can be used to save money. While the deposit needs to be paid when the contract is signed, the balance of the purchase price does not have to be paid until construction is complete. This means you don't actually need finance until settlement. Since construction can take 18 months or more, it's easier to build substantial cash savings over time that can be used to help reduce your mortgage.
Greater choice One of the greatest benefits of buying off-the-plan is that you get to choose your preferred property in any given development. Normally you don't have that opportunity if a property is presented in the retail/high street real estate market. If you are quick off-the-mark and register your interest with us in a particular type of development One World Group can reserve the right opportunity as developments are presented to us by developers at our office. A wider array of choice means a greater opportunity to make sure you purchase an apartment, town house or home with a superior position, aspect and floor layout. It's quite common for example, for penthouses, corner units, those with the best views and ground-floor apartments with private gardens to be sold first. This in turn, can offer better potential for strong capital growth and maximise rental yields.
