A question many investors want the answer to is whether they should purchase an existing property or build a brand new one.
We’re going to go through some of the differences between the two:
Firstly, when buying a property you will need to pay stamp duty on the estimated value of the property. When buying an existing property you need to pay stamp duty on the house & the land component as a whole. So, let’s just say the property is worth $350,000, you will need to pay approximately $13,000 in stamp duty. Whereas, if you purchase a house & land package, you only need to pay stamp duty on the land component. So, if the property is worth $350,000 but the land is only worth $170,000 you will only be paying approximately $6,000 in stamp duty. You are saving yourself approximately $7,000 from the word go.
Also, with a brand new property, it is going to depreciate faster than an older property. Therefore, when tax time comes around you have more to deduct off of your taxable income. Again, you are saving yourself money.
Another difference between the two is that you are going to get a different range of potential tenants. With a brand new property you are going to get a lot more enquiries, because majority of people want to be the first people to live in a house. Therefore, the landlord has more control over who they want to put in to their property.
And last but not least, maintenance. With an older property you are going to have more maintenance issues, meaning money out of your pocket. Whereas, if you build a new property it is unlikely that you are going to have anywhere near as many maintenance issues, and even if you do come in to some issues they should be covered under warranty by the builder.
As you can see here, building a new property has a lot of tax and investment advantages over buying an existing property.
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