Buying property off the plan can prove to be a profitable investment, but it’s important to be aware of the pitfalls that can come with purchasing a property before it has been built. Buying ‘off the plan’ simply means buying a property that hasn’t been built yet. It can be a more flexible and affordable option compared to buying existing property, with a number of benefits for both home owners and property investors. Let’s see things to be consider when buying off the plan
Purchasers should have their legal representative review the contract carefully to understand exactly what they are buying. Typically the buyer will pay a deposit to secure the property with the balance payable upon settlement, after the building has been completed, and the certificate of occupancy has been issued. Purchasers are alerted 2 – 4 weeks prior to ensure they have their finances in order to settle on time. Extended delays in settling the contract can have costs applied to the purchaser.
The Best Price
The first properties released usually go for the cheapest, because the developers need fast early sales. Once they meet their financial requirements, they often up the purchase price on the remaining properties to make up for time & to increase their profits.
Off the Plan Purchase
An off the plan purchase means you can lock in the ownership of a property, without having to settle for an extended period of time. It may be one or two years before settlement, so capital growth can often make your initial deposit more valuable in the meantime. The risk here is that the value may decrease in this time, so it is important to be sure about the area, not just the property.
New properties are all the rage at the moment, as far as state and territory governments are concerned. Most provide stamp duty concessions for brand new properties, as they attempt to stimulate their economies through construction. First Home Owners Grants (FHOG) are available to purchases of new properties meeting the government requirements.
If the new property is being purchased for investment purposes the tax benefits can be far greater than those compared with an established property. The tax incentives can only be claimed once the property has been settled and you will need to commission a quantity surveyor to complete a depreciation schedule.
If you’d like to get some individual advice, please feel free to contact your trusted financial adviser at Carter Property Enterprises.