Financial benefits of buying off-the-plan

Buying off-the-plan essentially means purchasing a property either before or during the construction phase. The process can also amount to significant financial savings. 

Stamp duty savings

While stamp duty is a necessary part of any property purchase, most state governments offer stamp duty savings or waivers on the purchase of off-the-plan properties. The amount of duty payable depends on how advanced the construction of the building is and its current value as of the purchase date. 

For instance, in VIC, buying off-the-plan affords significant stamp duty savings for eligible first home buyers. You are eligible to apply for an exemption if you are a first home buyer and the dutiable value of your property is $600,000 or less. You are eligible to apply for a concession if you are a first home buyer and the dutiable value of your property is between $600,001 and $750,000, or the property will be your principal place of residence and the dutiable value is $550,000 or less. 

The concession amount depends on how far along the construction of the building is and its value when the contract of sale is signed. If construction is close to completion, the duty is likely to be higher. 

Time to save

One of the most significant financial advantages of buying off-the-plan is that you will likely only need a 10% deposit up-front with the balance due when the project is completed. This makes it much easier to enter the property ladder. 

Once you have signed your off-the-plan contract, you will have the construction period to organise your remaining finances. With larger developments, the construction period can be up to a year or more - giving you plenty of time to save. 

Tax depreciation 

If you intend to purchase an off-the-plan property and then lease it out, you may benefit from tax deductions worth thousands of dollars. When your apartment is an investment asset, you can claim its depreciation against your tax return. 

Brand new property

There’s nothing quite like a brand new property. Buying off-the-plan means everything in your new home is brand new, including all your fittings, fixtures and appliances. One of the financial perks of ‘brand new’ is less maintenance which will save you money. In addition to less maintenance, buying off the plan means you won’t need to redecorate any time soon - another saving. 

While the above demonstrates some of the financial benefits of buying off-the-plan, please consult your financial adviser before making a property purchase. 

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