Buying an Apartment Off the Plan in 2025

Buying an apartment off the plan can be an exciting way to secure your dream home or investment property. However, the process can seem complex, especially if you’re new to the property market. To help you navigate this journey, we’ve put together a FAQ-style guide to answer your most pressing questions about buying an apartment off the plan in 2025.

What does “buying off the plan” mean?

Buying off the plan means purchasing a property before it’s built. You’re essentially buying based on the developer’s plans, designs, and promotional materials. The property is typically completed within a few years, and you’ll settle on the purchase once construction is finished.

Why would I buy an apartment off the plan in 2025?

There are several potential benefits to buying off the plan:

1. Price Lock-In: You secure today’s price, which could be lower than the market value by the time the apartment is completed.
2. Customisation: Some developers allow you to choose finishes, fixtures, and layouts.
3. Stamp Duty Savings: In some states, you may be eligible for stamp duty concessions or exemptions for off-the-plan purchases.
4. First Home Buyer Incentives: If you’re a first home buyer, you may qualify for government grants or schemes.

However, it’s important to weigh these benefits against potential risks, such as construction delays or changes to the final product.

What should I consider before buying off the plan?

Before committing to an off-the-plan purchase, consider the following:

1. Research the Developer: Look into the developer’s track record, reputation, and past projects.
2. Location: Ensure the area has good growth potential, amenities, and infrastructure.
3. Contract Details: Have a solicitor or conveyancer review the contract to ensure you understand your rights and obligations.
4. Finance Approval: Check with your mortgage broker or lender to ensure you can secure finance for an off-the-plan purchase.
5. Sunset Clause: Understand the sunset clause in your contract, which outlines the timeframe for completion and what happens if the project is delayed.

What is a sunset clause?

A sunset clause is a condition in the contract of sale that sets a deadline for the completion of the project. If the apartment isn’t completed by this date, either party (the buyer or the developer) may have the right to terminate the contract.

For buyers, a sunset clause provides protection against indefinite delays. However, it’s important to ensure the clause is fair and doesn’t favour the developer. In some cases, developers may use sunset clauses to cancel contracts if property values rise, allowing them to resell at a higher price. Always have a solicitor review the sunset clause to ensure your interests are protected.

Should I buy an apartment to live in or rent out?

The decision to buy an apartment as a primary residence or an investment property depends on your financial goals and personal circumstances.

Buying to Live In

If you’re purchasing the apartment as your primary residence:

• You may be eligible for first home buyer incentives, such as grants or stamp duty concessions.
• You can move into a brand-new home tailored to your preferences.
• The property is exempt from capital gains tax (CGT) if you sell it in the future, provided it’s been your main residence.

Buying as an Investment

If you’re purchasing the apartment to rent out:

• You can generate rental income to help cover mortgage repayments and other costs.
• You may be eligible for tax benefits, such as claiming deductions for expenses like property management fees, maintenance, and depreciation.
• When you sell the property, you may be subject to capital gains tax (CGT) on any profit made. However, if you hold the property for more than 12 months, you may qualify for a 50% CGT discount.

It’s important to consult a tax accountant or financial advisor to understand the tax implications and benefits of your investment.

What are the tax benefits of renting out an off-the-plan apartment?

If you purchase an off-the-plan apartment as an investment property, you may be eligible for several tax benefits, including:

1. Negative Gearing: If your rental income is less than your expenses (e.g., mortgage interest, maintenance, and property management fees), you may be able to claim the loss as a tax deduction against your other income.
2. Depreciation: You can claim depreciation on the building’s structure and fixtures, as well as on any appliances or furniture you provide. A quantity surveyor can prepare a depreciation schedule to maximise your claims.
3. Capital Works Deductions: You may be able to claim deductions for construction costs over a period of up to 40 years.

Always consult a tax professional to ensure you’re claiming deductions correctly and complying with Australian tax laws.

How do I finance an off-the-plan purchase?

Financing an off-the-plan purchase works similarly to buying an established property, but with some key differences:

1. Pre-Approval: Obtain pre-approval from your lender to understand your borrowing capacity.
2. Deposit: You’ll typically pay a deposit (usually 10%) when you sign the contract, with the balance due at settlement.
3. Valuation Risks: Be aware that the property’s value at completion may differ from the purchase price, which could affect your loan-to-value ratio (LVR).
4. Interest Rates: Consider how potential interest rate changes between now and settlement could impact your repayments.

Your mortgage broker can help you navigate these factors and find a loan product that suits your needs.

What are the risks of buying off the plan?

While buying off the plan can be rewarding, it’s not without risks:

1. Construction Delays: Projects can be delayed due to unforeseen circumstances, such as weather or supply chain issues.
2. Market Changes: Property values may fluctuate between purchase and completion.
3. Design Changes: The final product may differ slightly from the plans or promotional materials.
4. Developer Insolvency: In rare cases, the developer may go bankrupt, leaving the project unfinished.

To mitigate these risks, conduct thorough due diligence and seek professional advice.

What government incentives are available for off-the-plan purchases?

Depending on your circumstances and location, you may be eligible for:

1. First Home Owner Grant (FHOG): A one-time payment for first home buyers.
2. Stamp Duty Concessions: Some states offer reduced or waived stamp duty for off-the-plan purchases.
3. First Home Guarantee Scheme: Allows eligible first home buyers to purchase with a deposit as low as 5% without paying lenders mortgage insurance (LMI).

Check with your state revenue office or a qualified advisor to see what incentives you may qualify for.

What steps should I take to buy an apartment off the plan in 2025?

Here’s a step-by-step guide to help you get started:

1. Set a Budget: Determine how much you can afford, including deposit, stamp duty, and other costs.
2. Research the Market: Look for developments in areas with strong growth potential.
3. Inspect Display Suites: Visit display suites to get a feel for the quality and design of the development.
4. Review the Contract: Have a solicitor or conveyancer review the contract before signing.
5. Secure Finance: Work with your mortgage broker to arrange pre-approval and finalise your loan.
6. Monitor Progress: Stay in touch with the developer for updates on construction progress.
7. Final Inspection: Before settlement, inspect the completed apartment to ensure it meets your expectations.
8. Settle the Purchase: Pay the balance and take ownership of your new apartment.

Final Thoughts

Buying an apartment off the plan in 2025 can be a great way to enter the property market or expand your investment portfolio. However, it’s essential to do your homework, seek professional advice, and understand the risks involved.

If you’re considering an off-the-plan purchase, reach out to us today to discuss your financing options and ensure you’re well-prepared for the journey ahead.