The Untold Truths About Buying Off-the-plan Properties…

At Your Australian Property Solutions (YAPS) we usually recommend our clients purchase property that provides high capital growth, or rental income, depending on your requirements.  Also many of our clients are looking for a principal place of residence. This can also represent a capital growth investment as it’s important to acquire property that  appreciates in value.  This assists  in building wealth.

We almost always buy in well established areas (usually within 15-20 km from the Melbourne CBD) which are either blue chip or have great infrastructure and amenities.

We very rarely recommend buying off the plan or in remote areas for these reasons:

1. So-called stamp duty savings can be misleading as the developers or builders factor the savings into the price.
2. You still need to pay a deposit and it might stay in the developer’s trust account for up to two years while the property/complex is being completed.
3. Often the completed property does not look exactly like what was seen in the show room.
4. New properties take many years to appreciate in value when you buy off the plan.  If you need to sell soon after completion, generally you cannot sell for the price you paid.
5. If it’s a rental investment – there could be anywhere from 50 to 200 properties at any one time trying to be rented out.  So it can be ‘a race to the bottom’ to see who can rent out at the cheapest price in order to get a tenant first.
6. Capital appreciation is based on what other properties have sold for as well as access to transport and logistics and amenities. As such if you had bought off the plan in a remote area your investment may lose value.
7. Claiming tax depreciation on buildings can be misleading, as when it comes time to sell (which can sometimes be out of your control due to unexpected circumstances) the depreciation previously claimed is subtracted from the original purchase price, effectively, leaving you paying higher capital gains tax (CGT) than would otherwise be the case.

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