Don’t let loan restrictions stop you from buying off-the-plan
With the Australian Prudential Regulation Authority (APRA) recently restricting capital held against loans by banks, this has resulted in limitations to investor lending. Many Australian property investors are now fearing the consequences if they are unable to meet Loan to Value Restrictions (LVR) particularly when buying through unconditional contracts.
It is fundamental for property investors to take the time to research the economic environment against their financial position before plunging into purchasing off-the-plan.
Buying off-the-plan generally means you are entering into a contract to purchase a property prior to, or during the construction phase of a development. The recent changes by APRA could result in investors having no choice but to pay a higher deposit than anticipated to meet the new LVR requirements.
When purchasing off-the-plan, depreciation is an area investors don’t always consider when making purchase decisions. Claiming depreciation on off-the-plan properties can significantly improve an investor’s cash flow. Finding out what depreciation deductions are available on a proposed property is considerably important to help investors make astute financial decisions when taking this next step.
BMT Tax Depreciation can provide a free depreciation estimate of the likely deductions available. This helps property investors crunch the numbers and consider their after tax position once a property has been purchased. For developers a depreciation estimate can help them ‘pitch’ their projects to potential buyers.
Learn more: Crunch the numbers and save
A depreciation estimate can be calculated for off-the-plan properties at any stage of the development. On average, BMT will find between $7,000 and $12,000 in deductions in the first full financial year alone for owners of off-the-plan units. The deductions found can make a huge difference to an investor’s cash flow and long term financial success.
It is recommended to seek advice from a Mortgage Broker with regards to a loan when purchasing off-the-plan.
Banks and Mortgage Brokers will take into account the potential income earned from the property when considering a potential investors loan. They may also take into consideration any expenses incurred such as property management fees and repairs and maintenance and the depreciation deductions the owner is entitled to claim. They will do this by asking potential investors to supply rental appraisal for the property and an estimate of the deductions they are entitled to.
For a depreciation estimate of the likely deductions available for any off-the-plan design, visit www.bmtqs.com.au/tax-depreciation-estimates.