Property developers normally launch sales
in 3 stages;
1) Before Construction
2) Start of construction and;
3) Completion.
Buying a property before or during construction is commonly
known as ‘buying off the plan’.
Why Buy Off The Plan?
Considerable Savings
By purchasing off the plan you can make considerable savings
on the cost of your property. This is because land acquisition
prices and construction costs generally appreciate. Investors
sometimes speculate in property investment this way. New home
owners are able to secure their home before it is complete
which gives them time to arrange funds to purchase the new
home at settlement.
You can buy with a 10% deposit, long settlement
Pacific Lifestyle Property offers all new properties with
only a 10% deposit and the balance upon completion/settlement.
The deposit is normally payable by cash, bank guarantee or
in some cases with a deposit bond. By securing property with
this small deposit, you can have your money working for you
in other areas until settlement. It allows you to organise
finance or perhaps the sale of another property before settlement
occurs.
Tax Deductions/Depreciation
The Australian government wants to encourage the building
of new housing so they have ruled that property investors
can receive tax deductions on income producing property in
the form of depreciation allowances. New properties have the
highest depreciation allowances. The building, fittings &
fixtures and furniture at the property can be depreciated.
Only a licensed quantity surveyor can prepare an Australian
Tax Office compliant depreciation report. The depreciation
report specifies the allowances / deductions for when your
accountant prepares your annual tax return. This could mean
you pay much less tax than you otherwise would have. We suggest
you speak with your accountant or a quantity surveyor for
more information on depreciation allowances.
Custom fitout
Depending on your individual requirements, and the property
on offer, it may be possible to customise the property. This
is particularly common if you need wider doorways in the case
of occupants in wheelchairs. Customisation will involve discussions
with the developers architects and business managers. Sometimes
a contract price variation will be necessary, for example
if you require imported exotic African onyx flooring throughout!
Reduce Transfer Duty
In Queensland a buyer of property will pay a set amount of
transfer duty on the purchase price. As your property may
appreciate during the construction period, you could make
a significant transfer duty saving.
How to Buy Off The Plan in Queensland
Buying off the plan in Queensland is
generally a 4 stage process;
Stage 1
Spend some time researching available properties. Compare
locations, floor plans, features, outgoings, finishes, settlement
dates and more.
Stage 2
Check the sales contract out. Haggle over any essential
terms
Stage 3
Organise finance using a bank guarantee, cash deposit, or
deposit bond equal to 10% of the purchase price.
Stage 4
Prior to settlement you are able to inspect the property
to ensure it matches the sale contract. Settlement occurs
when the property construction is complete and a separate
indefeasible property title has been registered with the
Department of Natural Resources and Mines. Usually 14-21
days notice is given to settlement.
Frequently Asked Questions
Q) Isn’t buying off plans risky?
A) Like all investments there are risks.
You can reduce the risk by being well informed and researching
the market before you buy. We recommend you seek advice when
you need it from your solicitor, accountant and financial
planner.
Q) What if the real estate market enters a downturn,
will my property be worth less than I paid for it?
A) It is acknowledged that you can lessen the risk
of dropping prices by purchasing in premium locations that
have shown a history of strong upwards growth. Real Estate
markets are cyclical by nature and like the share market,
it’s all about timing your sale to coincide with a rising
market so as not to incur a loss.
Q) How do I know what the finished property will be
like?
A) Ask to be supplied with floor plans, artist
impressions of the buildings, a schedule of inclusions &
finishes, a list of facilities. If you need ultra fine detail
before you make a decision, ask to sight the approved construction
plans. Research the developers past projects and reputation
as well.
Q) Are there any warranties on new properties?
A) For your further peace of mind, new properties
in Queensland attract statutory warranties protecting you
from defects. Fittings and fixtures are complete with valid
warranties.
Q) How can I be successful?
A) Keep an eye on the market to assist in
timing your purchases or sales. Speak to real estate agents
about sold properties in the area’s you are interested
in.
Published by PLP Research, 1 July 2008
Research provided by:
