Investing in new property
Buying a new, rather than established property, can benefit investors in several ways. First, there may be depreciation advantages. The building itself can be depreciated, but since July 2017, depreciation for fixtures and fittings (things like stoves, water heaters, curtains and carpets) can only be claimed on newly built properties.
A new property can also come with lower maintenance costs than an older place. And understandably, tenants may be more attracted to a new property – and even be prepared to pay higher rent.
If the idea of investing in a newly built place appeals to you, it’s worth weighing up the different ways to get into the market.
House and land packages
House and land packages can be a hassle-free way to build a new property. You select a block of land in a new
As vacant land tends to be more abundant – and cheaper, in outer suburban locations, house and land packages can be most available in the new estates of developing suburbs. Be sure to check the location includes facilities that might appeal to tenants such as schools, shops and transport links.
Buy land and build
Buying land first, and building
When you buy vacant land, some states only charge stamp duty on the value of the land itself – the value of the dwelling you add later is excluded. Check your state or territory for what applies to you. Nonetheless, be sure to allow for the total costs of the project.
A sloping block
Buying off the plan
Buying off the plan involves committing to a property, often an apartment, which is not yet built.
Here too, this can mean savings on stamp duty. And in a competitive market, developers may offer discounts and other incentives to early buyers.
But there can be risks. The property market may fluctuate during the construction period. It could mean that on completion, your property is worth less than you expected, and this can make it hard to secure loan finance.
Financing a newly built property
Building a new dwelling can involve slightly different funding requirements than an established property. You may need two loans – one for the land and another to build the residence. Most lenders can bundle these loans together, or speak to an Aussie Broker about the loan options that can work for your circumstances.
It’s also important to speak with your tax adviser. Chances are you won’t receive rental income while building work is underway, and
If investing in
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- Chapter One : Things to consider before investing in property
- Chapter Two : Determining where to invest
- Chapter Three : Investment properties by dwelling types
- Chapter Four : Finance for your investment property purchase
- Chapter Five : How to invest in property
- Chapter Six : Adding value to your investment property
- Chapter Seven : Positive and negative gearing
- Chapter Eight : Getting your loan
- Chapter Nine : Selling your investment property