There are lots of considerations to be made before committing to your first or next investment property and one of those is the decision to buy new or established. At PanVest Property, we specialise in new and off-the-plan properties in areas with good fundamentals. New properties generally have the greatest cash-flows, have the longest warranties, give the greatest financial security and are the most sought after for both tenants and homeowners. Simply, new property gives you the most security! Read on to find out more …
Benefits to buying new investment property –
DEPRECIATION AND TAX BENEFITS
Assets depreciate in value as they age, and the Australian Tax Office (ATO) allows owners of income-producing properties to claim this depreciation as a tax deduction. New residential property can claim capital works deductions of 2.5% on the property itself, including walls, roof, doors, etc, for 40 years. In addition to this, plant and equipment depreciation can be claimed for fixtures and fittings such as carpets, blinds, air conditioners, hot water systems, and the like. Depreciation on fixtures and fittings is NOT claimable for existing properties. Therefore, the newer the property and its fixtures and fittings, the greater the tax benefits to the investor. Older properties could cost you thousands in lost tax refunds.
Typically, new dwellings are perceived to be higher-quality and lower-maintenance, with new appliances and modern comforts that tends to draw more interest from tenants. Competing tenants are often prepared to pay premium prices to secure desirable properties, increasing your return on investment. New property also tends to attract higher-quality tenants and lowers the risk of your property sitting vacant for long periods of time.
Builders of all new properties are required by law to take out Home Warranty Insurance this protects you, among other things from any major building defects for a defined period after the build. Often the Fittings also have their own warranty periods also. Add this all together and you can see that new property, therefore, has less repair and maintenance risk than older, established properties.
NO NASTY SURPRISES
When you buy a new property, you know exactly what you’re getting. There is no unknown history, wear and tear, or nasty surprises lurking in the walls, which could potentially be costly or affect the market value of the home. From an investor’s point of view, the newer plans are designed to suit the needs of the market and will generate the most demand from tenants and prospective buyers, rather than making do with what’s on offer across the general market.
PAY LESS STAMP DUTY WITH HOUSE & LAND PACKAGES
When you purchase an existing home, you pay Stamp Duty on the value of the entire property. When you build a new house and land package, you only pay stamp duty on the land component, saving you thousands of dollars.
Some state and territory governments provide incentives such as stamp duty concessions and new home grants to encourage investors and owner-occupiers to build new and help ease the housing shortage and rental crisis across the country. These incentives vary between states, as does eligibility criteria, so it’s important to be aware of what incentives might be available to you, to make the most of your investment.
NO RENOVATIONS AND EASIER MAINTENANCE
When you build a new home, there is no need to spend time and countless weekends renovating which can be an expensive and time-consuming process.
New homes tend to be more energy efficient compared to older, established homes. Builders now must meet environmental and sustainability standards in their builds and are expected to complete jobs to a higher standard than most older builds. Not only are they now able to offer more sustainable materials and technologies, but Builders are becoming more aware of sustainable design such as block orientation, naturally lit spaces and airflow. Sustainable materials have become more mainstream, appliances are more energy efficient, and more people are opting for sustainable energy sources, such as solar panels. New builds generally make less of an impact on the environment, make for happier and healthier tenants and save Landlords money in the long term. In addition to this, older homes may still harbour toxic materials such as asbestos, lead paint, mould etc.
HIGHER CAPITAL RETURN
New investment properties are often found within new master-planned estates or infill sites. Developers put a lot of research into the locations they build in to make sure that the completed builds are well sought after by tenants and homeowners. As such, new homes are more likely to enjoy higher capital growth. In addition to this, in a high-growth market, new estates often enjoy price growth between staged land releases, referred to as ‘mechanical growth.’
The advantages of using a property investment consultant such as PanVest Property is that you get wholesale access, and analysis, of new house & land developments right across the country. Property that is not marketed on public marketing sites such as realestate.com.au. We are independent of developers and only show you property that suits your needs.
Now more than ever it’s important to have an expert in your corner to make sure your new investment property has good growth prospects and is making you money, rather than costing you money. For further information on new and off-the-plan properties, feel free to get in touch – 0410 138 956.