With the number of residential developments increasing across the country, more Australians have the option to buy their next property off the plan.
Purchasing a property off the plan is a great option for buyers wanting a brand new home with out the premium price tag.
Here we take a look at how buying off the plan works, along with some benefits of buying a property before its even built.
What is Buying Off the Plan?
Buying off the plan means committing to buying a property before it reaches the final stages of development. This is a legally binding agreement between the buyer and the seller of the property. It is the same as if you are signing a contract of purchase in a normal buying process.
Buyers cannot physically visit an off plan property so the seller will often supply plans and artistic renders of how the finished property will look as well as additional information about the property developer.
Some new developments have a physical display suite allowing potential buyers to get a better idea of the project and a more detailed feel for the property fixtures, fittings and finishing’s.
Advantages to Buying Off the Plan
You benefit from a brand new property!
Seen as the property is brand new, there will be no repairs or renovations that need to be completed. This is one less thing to worry about as a homeowner.
This puts you in a great position compared to buyers of older existing properties, who may need to set aside the funds for repairs and renovations to keep their property liveable.
With changes to the National Construction Code expected to come into effect next year, in coming years all new properties will need to meet more stringent energy efficiency requirements.
With gas and electricity costs increasing, this is good news for future off the plan buyers who can expect their energy bill to be reduced compared to owners of less energy efficient properties.
You benefit from having more time to save those dollars!
When purchasing off the plan, buyers are often expected to only pay a 10% deposit with the balance payable upon completion of the property. This gives buyers more time to save before moving into the property and starting to pay off a home loan.
You could make a profit before even moving in!
When you buy off the plan, sign a contract and pay your deposit, you are purchasing the property at a fixed price on a particular date. From that point, until the property is completed and you make your final payment, you don’t have to worry about what’s happening in the market or the risk of property prices increasing.
If the market goes on an upward trend and the property increases in value while its being built, this could help you make a profit before you have even moved in.
You may get a stamp duty discount!
I you are a first home buyer, most states and territories will offer you exemptions and concessions on stamp duty or transfer duty for buying off the plan.
Even if you are not a first home buyer, some states and territories also offer stamp duty discounts for a new property purchase. In some cases, stamp duty can be waived all together or only applied to the value of the land and not the building.
Check for stamp duty concessions or exemptions that you may eligible for with your state’s revenue office.
Investors can get extra tax benefits!
For investors planning on leasing a property that has been purchased off the plan, significant tax benefits can be available.
A newly built property contains new fixtures and fittings, meaning investors can maximise deductions and improve cash flow in their first few years of ownership. However, deductions can generally only be claimed once the property has been completed and is generating an income.
