Now is a good time for OTP purchases in Victoria, says expert

“Apart from the taxation benefits, legislative changes in Victoria coming into effect with the start of the new financial year really make it a no-brainer to look at off-the-plan property right now,” said Ms Mays.

Up until 30 June purchases of off-the-plan property do not require the normally applicable stamp duty charges, which can sometimes be between $20,000 and $35,000. In the new financial year the full stamp duty is payable, meaning buyers will have to have more savings in order to proceed.

“Not having to pay stamp duty on an off-the-plan property has made it possible for a number of our clients to get into the market considerably sooner,” she noted. 

The Victorian state government had amended the usual stamp duty regulation in order to stimulate the market, but on 1 July the waver will fall away.

“This is real time-is-money situation,” Ms Mays said.

“In simple terms, buying any property usually requires the extra funds to pay for stamp duty on top of the required deposit, loan fees and the cost of purchases such as legal costs.”

Ms Mays indicated another benefit with buying off-the-plan is that you only pay a 10 per cent deposit and are not required to settle on the purchase until the property construction is fully complete.

“This often means there are months during which you are not servicing the loan but are already securing the asset.”

“In many cases, by the time that the property is ready and settlement occurs, the property has already increased in value from what it was purchased for, giving you a potential for instant capital gain.”

She also said tax depreciation of the inclusions means that you can leverage the off-the-plan purchase against your taxable income and reduce the amount of tax you are paying.

“It is recommended to get advice from an experienced property savvy accountant on the ins and outs of this,” she said.

Ms Mays points to criticism of the unseen nature of buying OTP, and warns of the importance of being diligent.

“In some cases, the completed property differed in the finish and standard as it was suggested in the brochure. These are rare occurrences but it is of utmost importance to do your due diligence before buying.”