New vs Old Propertyippa-admin2015-03-01T12:42:46+11:00
New vs Old Property
New property offers the investor a number of advantages:
- If the property is a house and land contract to be built stamp duty is only paid on the value of the land and not on the contract price. This offers the investor a considerable saving. There is however interest to be paid on the loan during construction. This with the stamp duty on the land can equate to stamp duty on a completed package, so what’s the advantage?
- Interest paid during construction is tax deductible in the year it is incurred. Stamp duty is considered a ‘capital cost’ and not deductible until the asset is sold.
Depreciation is maximised in the first 5-10 years of a property’s life. The building is depreciated at 2.5%pa for 40 years whereas the fixtures and fittings (around 20% of the cost of construction) is claimed over the first 5-10 years.
- Brand new properties usually have minimal maintenance and no renovation expenses
- Brand new properties are often part of master planned estates with attention to open space and streetscapes. Consistency of housing means that it is unlikely you will end up next to an ‘eye sore’!
- New properties are built with changing demographics and trends in mind enhancing the market appeal for tenants and re sale.
- In order to stimulate housing starts and the economy through the multiplier effect of construction, Government incentives and concessions are often offered on brand new property.