Why off-the-plan is on the money

When buying an investment property, an off-the-plan purchase has many tangible long-term benefits. New apartments can be rented out for a premium and attract high-quality tenants. If you have chosen well, the apartment will be in a lifestyle location, which will add to its appeal for tenants.

One of the greatest advantages for investors is that an investment property can help you minimise your tax. A new property is more advantageous than an established one, particularly when claiming depreciation, because an established property has already depreciated to a certain extent.

The ATO allows investors to claim deductions if the property is rented or available to rent. Management and maintenance costs, including interest on the loan, can generally be claimed against your current-year income. Depreciation and the cost of improvements can be deducted over several years. This, combined with negative gearing, makes new apartments an easy choice.

New buildings require little in the way of maintenance and upkeep. Before you settled, you would have inspected the apartment for defects and anything that wasn’t quite right would have been fixed. You can hold a new apartment for a long period at low cost thereby maximising overall capital growth.

With an older property, there is always the possibility of unexpected and uncontrollable expenses. For example, legislation can dictate new standards and you may be required to replace heating, electricity components, the balcony or other building components.

With an off-the-plan purchase, time is on your side. You can lock in ownership of the apartment without having to settle for quite some time. It might be up to two years before settlement, so it’s not unusual for capital growth to make your initial deposit more valuable during the construction phase.

However, it can go the other way and the value can decrease in the time between deposit and settlement. This is one of the reasons why it is critical that the property has the timeless attributes that make some real estate impervious to market cycles – good design, plenty of natural light and an excellent location.

The proven location that makes an apartment purchase successful is an inner-city area with excellent amenities and frequent, reliable transport. The vibrant lifestyle attracts tenants and buyers, so apartments close to cafes, restaurants, entertainment venues and good shopping will always command a premium.

When buying off-the-plan, get in early. Often the first release of apartments is the cheapest because developers are after early sales. Being an early bird also allows you to choose the best view or the quietest location or other favourable features that can give you an edge when renting and a higher price when selling.

St Dane Property Solutions has partnerships with tier 1 developers across Australia giving them pre-market access to some of the most exceptional off-the-plan apartments and townhouses. They can help you buy the right property, at the right price, at the right time: https://stdaneproperty.com.au

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