The advantages of buying off the plan
Are you thinking of purchasing an apartment or townhouse? If so, you may want to consider the advantages of buying off the plan.
Buying off the plan means entering a contract to purchase a property that has yet to be constructed, or where construction has not been completed.
There is no doubt that if you’re thinking of buying off the plan, you need to carry out research to make sure it is the right option for you. For those who decide it is, buying off the plan can have significant advantages. Some of these are listed below.
Stamp duty exemptions and concessions are available to many buyers, with the biggest helping hand being for first home buyers. In Victoria, changes to stamp duty laws in 2017 mean that investors are no longer eligible for stamp duty concessions but owner occupiers can still qualify depending on the cost of the property (for more information visit Victoria’s State Revenue Office website.)
There are a range of tax benefits available to off the plan investors. While in Victoria investors can no longer claim stamp duty concessions, they can claim depreciation on their property. This covers fixtures, fittings and appliances such as ovens and dishwashers. Also, if you have borrowed to buy the property you are able to claim losses on the property as an offset to your taxable income, known as negative gearing.
One clear advantage of buying off the plan is that you can gain from capital appreciation. As you don’t have to settle on the property until it is completed, you may find that that the property is worth more at the time of settlement than what you agreed to pay for it.
If construction is yet to commence you may be able to customise your apartment buy changing the floor plans, or specifying the choice of fixtures and fittings. The ability to shape your property to suit your specific needs is one of the great advantages of buying off the plan.
In many cases you can secure a property simply by paying the developer a 10%, or in some cases a 5%, deposit with the remainder of the balance not due until the property has been completed. With many properties taking 12-18 months to complete, this leaves you a good amount of time to continue to save, with the reassurance that the price of the property is locked in.
Buying off the plan is often a great way to lock in a good price. As developers often need to sell a certain percentage of apartments in the building before they can commence construction, many offer lower prices and other financial incentives.
All new residences are covered by the builders’ guarantee, which requires that the building is properly constructed and delivers all the specifications included in your contract. The builder’s guarantee stipulates that all structural or interior building faults that occur in the first seven years must be repaired by the builder.
For more information on how LK Property Group can help you with your property search, please call 13 LK PG (13 55 74).