Buying off the plan  The benefits, savings, flexibility, warranty, wider selection & more…
Buying off the plan as the term suggests means entering into a contract to purchase a property prior to its construction. Essentially, you are selecting and purchasing a property from the developer’s floor plans. In most cases, construction of the project may not have even commenced. Buying off the plan lets you purchase a property for tomorrow at today's prices. The benefits of buying off the plan are equally beneficial to the developer and the investor. Alternatively, for the investor, there are many reasons to consider buying off the plan, some of which include a lower entry price into the property market, good capital growth and a competitive return. The Benefits Stamp Duty Savings Lock in a price for your property Delayed settlement gives you more time to save a deposit Suggestions in finishes, floor plans and interior style Significant tax savings Positive Gearing Building Warranty Wider selection in the development Time to sell your property Possibility of 100% finance
Stamp Duty Savings Stamp Duty is a State Government tax on the transfer of property and is charged in all Australian states. The main advantage to buying 'off the plan' is the considerable saving you can make on Stamp Duty. In some Australian states, the law requires Stamp Duty be paid on the value of the property at the time of signing the purchase agreement (contract). By buying ‘off the plan’ you often enter into a contract before construction commences and therefore need only pay stamp duty on the value of the vacant land. Lock in a price for your property You can lock-in the purchase price of the property today, meanwhile, one - two years down the track you can watch the value of your property grow relative to market movements. Generally, property values increase between the period of buying off the plan (signing the contract) to the date the development's completed. Delayed settlement gives you more time to save a deposit A 5 or 10% deposit or a deposit bond is all that is needed to buy off the plan. The balance is paid on completion of the development, this gives the investor time, 1 to 2 years to maximise and organise their financial affairs. Buying off the plan can offer you: Generally, as the value of the property increases over the construction time a greater borrowing power as the bank will allow you to borrow off the new market value. Suggestions in finishes, floor plans and interior style Buying off the plan provides the opportunity to put forward any suggestions for design and finishes in the property you are purchasing. Significant tax savings Off the plan purchases qualify for significant depreciation tax savings that are greater than those available on existing buildings if purchased for investment purposes. Depreciation expenses that can be claimed include building, furniture and fittings. In addition, a rental property is negatively geared when it is purchased with the assistance of borrowed funds, and the net rental income, after deducting other expenses, is less than the interest on the borrowed funds.
The overall taxation result of negatively geared property is that a net rental loss arises. Deductions may be claimed for the full amount of rental expenses against your rental and other income such as salary, wages or business income when you complete your tax return for the relevant income year. Positive Gearing Interaction of market movements can sometimes mean an increase in property market value. This gives an investor the opportunity to receive higher rentals thus changing from a negatively geared situation to a more positively geared scenario. Building Warranty Properties as of 1989 (the Home Building Act) have building warranty attached, in NSW the warranty is seven years while in Victoria it is ten years. Wider selection in the development Buying off the plan does not limit your options in terms of variety, i.e. location, price and style etc. Investors have the option of choice and there are a wide variety of properties to choose from. Time to sell Buying off the plan allows more time so as to sell the property at a profit between signing the contract and completion date. Possibility of 100% finance As the value of the property increases over the construction time this gives a better opportunity to borrow more, as the bank will allow you to borrow on the new market value. For more information please Contact Us or request our Property List to access Researched Properties Australia Wide. | 
