If you're thinking of investing in property, you may be wondering whether it's better to build a new investment property or purchase an established home. There are several factors to consider when making this decision, such as stamp duty savings, quality of tenants and maintenance costs.

 

You will find conflicting advice on this topic, with some experts saying that it's always better to buy an established home, while others say that building a new investment property can be more advantageous. Ultimately, the decision comes down to research and what works best for you.

 

However, the main rule of thumb is that you need to purchase a property from someone who isn't pretending to be on your side, then taking a large undisclosed commission (create a free account here to see if you're getting ripped off).

 

In this blog, you'll find several advantages to building, instead of buying existing. You'll find that the Australian government is heavily interested in construction as it employs a large percentage of the population. Construction is often referred to as "the backbone of the Australian economy". As such, there are many concessions and benefits to building that make it an attractive option for property investors.

 

Some of the advantages of building your next investment property include:

 

1. You may be eligible for the first home owners grant (if it's your first home)

2. You can claim depreciation on your new property

3. You have more control over the outcome of the property

4. There is less competition when purchasing land

5. You may be able to get a construction loan with an interest-only rate

6. You can customise your investment property to appeal to your target market

7. Building a new property is often cheaper than buying an established one

8. There is less maintenance required

 

In this blog post, we'll take a closer look at the financial advantages of building your next investment property.

When you purchase an established home, stamp duty is calculated based on the property's market value. However, when you build a new investment property, stamp duty is only payable on the cost of the land. This can result in significant savings, particularly if you're purchasing an expensive property.

 

For example, stamp duty on a $1 million property in New South Wales would be $40,490. However, if you were to build a new investment property on that same piece of land, stamp duty would only be payable on the cost of the land ($500,000), which would amount to $20,245. That's a saving of $20,245!

 

Many investors use this strategy to minimise their upfront costs.

 

Let's compare the difference, use this calculator below to see how much you'd save by paying stamp duty on the land alone.

 

When you're looking for tenants for your investment property, you want to attract quality tenants who will take care of your property and pay their rent on time. New properties are more attractive to quality tenants than older properties because they offer modern amenities and finishes.

 

For example, a new property is likely to have a dishwasher, air conditioning and other features that tenants are looking for. Additionally, new properties tend to be better located than older properties, which makes them more attractive to quality tenants.

 

New builds are often cheaper to insure than older properties. This is because they're built to meet current building codes and standards, which results in a lower risk of damage.

 

One of the biggest advantages of building a new investment property is that you won't have to worry about major maintenance issues for many years. Older properties often require expensive repairs, such as replacing the roof or hot water unit.

 

Everything is covered under the builder's warranty, the time however varies from state to state.

 

For example, in NSW it is 6 years for structural defects and 3 years for non-structural defects, whereas in Victoria it is 2 years for both.

 

So if any repairs need to be carried out on your new investment property, you won't have to pay a cent - the builder will cover the cost.

 

This can save you a significant amount of money in the long run, as you won't have to worry about unexpected repairs or maintenance costs.

Another advantage of building a new investment property is that you can claim depreciation on the fixtures and fittings. This means that you can reduce your taxable income, as you'll be able to offset the depreciation against your rental income.

 

Depreciation is the gradual reduction in the value of an asset over time. When you purchase an established home, the depreciation has already been taken by the previous owner. However, when you build a new home, you may be able to claim depreciation on the fixtures and fittings. This can be a significant saving and is one of the key advantages of building your next investment property.

 

So, if you're thinking of investing in property, consider the depreciation benefits of building new. It could save you thousands of dollars over the life of your investment.

 

To find out how much you can claim in depreciation, you'll need to speak to a quantity surveyor or tax depreciation specialist and have a schedule done before lodging your tax return.

When you buy a house through Abodable, not only do you save in the above areas, but you'll also be eligible for the rebate. Abodable's goal is to make the house-buying process simple and affordable. We refund the majority of the commission back to you, the buyer. On average we have given back approximately $20,000 per transaction.

 

So, if you're thinking of investing in property, building a new investment property is worth considering. You'll enjoy stamp duty savings, high-quality tenants, reduced maintenance costs, depreciation and the Abodable.com rebate.