How Purchasing Off-The-Plan Can Save You Money

Market Insights
7 years ago
3 minutes

It’s no light decision deciding to invest your hard-earned savings in a property. With a myriad of things to consider, it can often be a daunting task sifting through the information you need to know. 

It seems the most important thing for all buyers is saving your pennies anywhere you can. Well, the good news is that purchasing off-the-plan provides a variety of financial benefits unique to new apartments.

Here, we explain the different ways buying an apartment can save you money in the long run.

1) You pay today’s price

This point is particularly unique to buying off-the-plan and thankfully benefits the purchaser. Prices go up and down, and more often than not inflation trends go up. Therefore, if you buy an apartment at today’s price and settle in two years, the figure stays the same.

It is possible to make significant profit from an off-the-plan purchase just by signing the settlement agreement. If you purchased your apartment in 2013 for $500,000 in Melbourne’s South Yarra, it is possible that today, in 2016, the apartment could be worth upwards of $650,000!

2) Time is money

You only need to put down a deposit to secure your apartment, and more often than not, this is 10% of the apartment price. That gives you between 6 and 40 months to sort your finances and secure a home loan, before you have to pay the remaining figure at settlement. With time on your hands, you can make a more researched and informed decision when it comes to finance. 

3) First-home buyers benefit

First-home buyers are the big winners when it comes to buying off-the-plan. Government grants are only available for those purchasing new homes or building new ones. So, if your apartment is valued up to $750,000, you may be eligible for the $10,000 grant in both Victoria and NSW. But, don’t forget, this grant is given to you upon settlement, so cannot be used as your deposit, and isn’t open to investment properties.

4) Stamp duty savings

There is the potential to save thousands, sometimes tens of thousands on stamp duty figures when it comes to purchasing off-the-plan. In Victoria, stamp duty savings can be as high as $23,000 if you purchase an off-the-plan apartment for around $700,000. Stamp Duty often catches first home buyers by surprise, but with off-the-plan the surprise is a bunny rabbit, rather than a clown.

5) Tax advantages

There are obvious tax advantages with buying off-the-plan, and the one you need to be most familiar with is a thing called ‘depreciation’. Depreciation is a reduction in the value of an asset over a certain period of time, particularly, in apartments, and is often be referred to as 'wear and tear’. Ultimately, you can claim the loss as a tax deduction. If your loss is around $50,000, that is $50,000 of tax that you don’t have to pay come tax-time.