The process of searching for a property can be overwhelming and exciting as prospective homebuyers have a lot of available options nowadays. In this article, we will discuss house and land packages, which have become increasingly popular with property investors from Truganina and across different states of Australia.
What Is a House and Land Package?
The term “house and land package” is quite self-explanatory. It is commonly used by developers to describe a package deal that includes both a piece of land and a new house that’s built on it. Majority of new home construction is done by developers that acquire and develop the land after it has been released by the government. Across Australia, there are thousands of property developers offering these packages, with each one offering a slightly different package.
What Are the Advantages of Choosing a House and Land Package?
1. Savings or Concessions on Stamp Duties
Many states in Australia offer a number of assistance grants as well as tax concessions for first-time homebuyers, especially those buying new land or building a new house. In the state of Victoria, for example, the local government announced that a 50 per cent reduction on stamp duty will be granted to first-time homebuyers for any purchase of a new property that is valued up to $600,000. Additionally, a $20,000 regional First Home Owners Grant (FHOG) is available for new homes built in regional Victoria, and these will apply to contracts signed from July 1, 2017 to June 30, 2020.
2. Long-term Capital Growth on Land Investment
Over time, land generally increases in value. It can be a passive long-term investment as long as the location is strategically poised for growth.
3. Depreciation and Tax Benefits
The benefits of higher depreciation deductions are significant in new properties and should not be overlooked. The Australian Tax Office allows owners to claim depreciable assets, such as the furniture and fixtures and the structural cost of the building, as tax deductions. A $250,000 new home investment with a $30,000 worth of fixtures can create an approximate of $16,000 in total tax deductions per year.
4. New Properties Attract Tenants
Naturally, landlords want high-quality tenants to make their ventures as stress-free as possible. Brand-new homes have the advantage of being incredibly attractive to tenants who are willing and can afford to pay a premium, given that the property offers all the up-to-date facilities and modern conveniences. For property investors or landlords, this also means strong rental returns for their investment.
5. Less Repair and Maintenance
Purchasing an old and established home can mean many surprises such as structural issues, plumbing concerns, and roof damage. These hidden issues can quickly add up to highly expensive maintenance costs. With new properties, there are none of those dreaded problems at least for the first few years. These new homes usually come with warranties and structural guarantees, which should leave homebuyers covered for any major repair and maintenance.
Purchasing house and land packages offers a lot of freedom and benefits, including tax advantages, income generation and solid long-term capital growth through land appreciation.