Advantages of Buying Off The Plan
Buying “off the plan” essentially means that a buyer of a new residential property enters onto a contract of sale for a property that is not yet built. The property may or may not be under construction.
1. You are buying a new residential property in terms of both the individual property
You are buying and the all the common property that forms the body corporate. You are not buying something that could be a bit old and shabby that needs some attention. This can especially apply to common property areas such as lifts, foyers, landscaped grounds and car parking areas.
2. You get the best possible choice
You get to pick the individual property that meets your exact requirements. You know what you want and you can make very detailed enquiries about all aspects of the development and the individual property that will suit you. You don’t need to compromise your choice.
3. You get time to organize your purchase
You can have up to 2 years or more to settle the sale. This allows ample time to sell other properties if you need to, organize finance and make other arrangements of your affairs if the need arises.
4. You buy at the contract price with a 10% outlay
The contact price is the settlement price sometime in the future. The most you will be asked to outlay is 10% of the purchase price as the deposit. Some projects allow you a choice of three forms of deposit – cash, bank guarantee or deposit bond. The bank guarantee and deposit bond options allow you to preserve your cash resources. If you do pay cash deposit, then you should insist that all interest on the deposit be paid to you at settlement. All deposits are kept in trust and you will not lose your deposit.
5. You can have the opportunity to make select changes to the individual property
In respect to the finishes and fixtures and in some cases the whole or part apartment design. This is generally at the cost of the buyer but it’s an opportunity because the building is not under construction.
6. You could realize a potential capital gain from time of signing the contract to settlement
This generally occurs in a rising residential market but it can also happen if a project has wide owner resident appeal after settlement. Many potential buyers will not buy until they see the finished project and they are happy to pay a premium over the original sale price.
7. You can realize significant depreciation benefits
You have the ability to claim Capital Works Allowances (Division 43) for whole building depreciation and Plant and Equipment Allowances (Division 40) for individual property fixtures and fittings. These benefits apply even to a new completed building and provide significant taxation benefits to the owner.
8. You get faster relief with the Capital Gains Tax (CGT) discount
When you buy off the plan, the contract date is the date when the Seller signs the contract (just after the Buyer signs). This date is regarded as the effective date of sale (not the settlement date). If you sell a property within 12 months of the date of sale any Capital Gain made is taxed at the owner’s marginal tax rate or higher if the gain increases the yearly income of the taxpayer. If you sell after 12 months you may qualify for the 50% CGT discount. With an off the plan purchase you can usually qualify for this discount before settlement.
9. You have the opportunity of setting up your new property if you are an investor, with a furniture package
If it is considered favourable for rental purposes. Generally long termed rental properties are becoming more sort after in select inner city locations. Rents achieved in these circumstances are around $100 per week more than unfurnished properties.
10. You become very familiar with the body corporate structure and the property management of the building
The Disclosure Statement (than forms part of the Contract of Sale) details all known aspects about the function and management of the building after settlement. The property owner can easily reference any building or management matter when needed