Question: Why are older properties cheaper than newer properties?

ANSWER:

Most people prefer to live in a brand new apartment. The reason some new properties may seem more expensive is that they offer a higher quality of living, the latest in construction methods, building design, facilities, technology and amenities. Ever increasing land and building costs means each new project usually costs more than the last one. Not to be overlooked also, is that an older apartment does not (usually) come with the same warranties and guarantees, and will need upkeep or renovation before a new one. All of these calculations need to be taken into consideration. As an investor, you need to look at what tenants are demanding, such as security systems, car parking, balconies, facilities such as pools and gyms, intercoms and internet-wired apartments. And now, buildings with concierges are becoming increasingly popular. These features are not always available in older apartments. In addition, by purchasing new off-plan property, you can save up to $25,000 (and much more in some cases) in Government Stamp Duty, only outlay 10% deposit up front (enabling you to utilise your funds elsewhere or more time to organise your financial affairs), save on legal costs and banks fees. The full tax benefits are only available on new projects, not older projects.

Question: Has the introduction of the GST on July 1, 2000 affected property investment?

ANSWER:

The cost of new property has gone up, as has land development and building costs. Longer term, it is more likely that new buildings in the future will cost more to build compared to the past.

Question: Explain what "Stamp Duty Savings" are?

ANSWER:

Stamp Duty is a State Government tax on the transfer of property and is charged in all Australian States. Only in Victoria do off-the-plan purchasers benefit from Stamp Duty savings. In Victoria, the simple rule applies, that if you purchase an established property, full stamp duty is payable on the total purchase price of the property. If you purchase "off-the-plan", you only pay Stamp Duty on the value of what physically exists at the time of purchase, ie. if construction has not commenced, you pay substantially less Stamp Duty. This saving can sometimes be more than A$25,000. Stamp Duty payable is calculated proportionately on the level of construction completed at time of purchase. Therefore if you purchase halfway through construction you will still receive roughly half the maximum saving. The earlier you buy the less Stamp Duty you pay and the more you save.

Question: Is it true that Stamp Duty Savings are only available in the state of Victoria?

ANSWER:

Stamp Duty Savings are ONLY AVAILABLE IN VICTORIA and have been an incentive for people from outside Victoria to invest in Melbourne property before construction has commenced. The maximum saving is not available on refurbished or existing buildings.

Question: Can the contracted sale price be varied?

ANSWER:

No, when you purchase from Central Equity and once the contract of sale is signed, the contracted sale price cannot be varied by either Central Equity or the purchaser and is fixed for the duration of the contract. There are no escalation clauses.

Question: What happens with my deposit when I purchase an apartment off-the-plan? Are there any progress payments?

ANSWER:

Off-the-plan purchasing provides for a longer than normal settlement with no progress payments. You only pay 10% deposit at the time of signing the contract. The 10% deposit is held in a legislated trust account. By law the 10% cannot be used by the developer until the property is fully completed. The full balance is paid on completion, often giving you more than 12 months to organise your financial affairs.

Question: What are the advantages in purchasing "off-the-plan"?

ANSWER:

The main advantages include substantial Stamp Duty savings, longer than normal settlement time frame, the opportunity to select from a range of finishes and options and also significant depreciation tax savings that are greater than those available on existing buildings if purchased for investment purposes. Only a small deposit (10& of purchase price) is needed until completion (usually 1-2 years) freeing up investors funds for other investments and giving time to organise finance etc.

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