New or Resale? The Depreciation Game: Learn how to play it.
Why buy an investment property brand new or off-the-plan?
There are a number of reasons that investors buy investment properties brand new or off-the-plan rather than an established property. The main motivation usually stems from the very reason that people purchase investment properties to begin with, which is commonly to lower their taxable income while maximising on returns.
Many investors look to purchase brand new as they are essentially maximising on their depreciation benefits while minimising on their out-of-pocket expenses, given that buying investment properties brand new means generally lower maintenance costs.
Example Depreciation Schedule
As you can see from the example depreciation schedule above, a newer property offers a far greater return on your investment. By buying an investment property brand new you are able to claim greater depreciation benefits in the first years of property ownership.
In the example above, there is a $7,716 difference between the depreciation on the first year of ownership compared to the 10th year of ownership. This is an example only and each property will differ.
This of course should be only one part of your considerations which may also include location, design and build quality, as well as tenantability.
Buying a property brand new often provides you with more choice too when it comes to the initial purchase. If you purchase off-the-plan you can select exactly what you are looking for in a particular development, whether it be a ground floor apartment with a courtyard, or a penthouse apartment with the best view.
There are a number of benefits to buy an investment property brand new, but at the end of the day it should come down to your goals, financial situation and really what works for you.
At Which Property we specialise in tailored property solutions for investors and owner-occupiers alike. We can help you understand your goals and find property solutions suited to you. Contact us today for more information.
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