Buying off-the-plan means entering into a contract to purchase a property prior to, or in some cases during, the construction phase of the development.
Whilst some people might find the idea of purchasing a property sight unseen a little scary, here are six benefits of purchasing a property off-the-plan.
1. Stamp Duty Savings
Stamp duty is a government tax applied to the purchase of a property. The costs vary per state and can be substantial; however concessions apply for off-the-plan purchases.
2. Tax Deductions
If you’re an investor you can claim various tax deductions such as property depreciation and the wear and tear of an investment property over time. The newer the property, the higher the deductions and the longer you will be able to claim.
3. Potential Capital Gains
When you purchase off-the-plan you lock in today’s price. Once construction on the development has been completed, which could take up to 18 months, the value of your property may have increased. You won’t have to pay any more, but you may end up with additional equity to put towards your next property purchase.
4. More Time to Save
Whilst a 10% deposit is typically required upfront, savvy buyers can use the time it takes to construct the property and reach settlement to save an additional deposit. A greater deposit means you can borrow less and reduce your long term debt.
5. Potentially Higher Rental Returns
In most cases a tenant will pay more to live in a new apartment, so as an investor there is the potential for higher yields.
6. Greater Choice
Buying off-the-plan offers a greater choice of location. Whether it’s an apartment on the top floor with water views or a house and land package on a corner block, the earlier you get in the more options you have available to choose from.