New vs. Established Homes
A common question that we get asked by property investors is "should I purchase a new home or an established property?" When you are entering the market to purchase an investment property, it's important to consider the benefits of purchasing a new property that established ones don't necessarily offer. These include; tenant appeal, warranty and maintenance, the ability to maximise on deductions, and importantly government incentives that come with new build homes. All of which will be discussed in further detail below.
Maximise On Deductions
If you're a property investor, a great incentive to purchasing new homes is that you can claim depreciation as a tax deduction. In Australia, if you're investment property was built after 1987, you may be eligible to claim depreciation. This is because the ATO acknowledges the fact that assets depreciate in value over time.
The newer your property is, the more that you can claim at the end of each tax year. When buying an investment property, investors can claim the building structure, fixtures, and fittings over 40 years from the build of the property. This further demonstrates the benefit of investing in new properties.
Improved Tenant Appeal
In general, new build homes have a better appeal to tenants. When buying an investment property, it's important to consider the amenities, appliances and technologies that these homes have in comparison to an established property.
New homes also attract quality tenants who are willing to pay higher rent prices. This means that the risk of having a vacant property is much less than you may expect with an established property. These tenants generally find paying for higher quality homes justified in order to support their quality of life.
Warranty and Maintenance
When buying new homes, you generally have peace of mind of knowing that your warranty coverage is extended. With new properties, minimal maintenance is required on fixtures and furnishings. These features tend to only need fixing and replacing the older that they get. Newer homes also tend to be easy in their upkeep as they're generally made of quality materials.
If you purchase a new home, you're more likely to be eligible for government incentives and savings. Two big savings include the First Home Owners Grant and savings to stamp duty.
First Home Owner Grant
If you are a first home owner, the government funds you with a grant that can reduce the upfront costs of purchasing purchasing or building your very first home. The value of the First Home Owners Grant differs for each Australian state and territory. In Queensland it's generally $15,000 and $10,000 if you're purchasing in Sydney or Melbourne.
Stamp Duty Savings
If you purchase a house and land package as a property investor you can save on an additional cost - being stamp duty. Depending on where in Australia you're located, you may only have to pay stamp duty on the land value when purchasing a house and land package. This means that you can save anywhere between $10,000 to $15,000 on this government tax.
Interested In Purchasing An Investment Property?
At REIF we're working with clients across the country to build their property portfolio. We have access to over 10,000 new properties across Australia. If you're interested in investing in property, please reach out to our team today!
Our contact details are listed below:
Ph: 1300 130 932