It’s a conundrum faced by many property investors, and making the right or wrong choice can make or break a portfolio.
Big tax benefits, generous government grants and a boatload of builder incentives have made a new build a compelling option for investors as much as owner occupiers in recent years.
One of the biggest factors attracting investors to new housing is tax related - with investors attracted to new builds because of their higher tax offsets and depreciation benefits.
Investors who choose a new build can claim depreciation deductions for all eligible plant and equipment assets on the property, a tax benefit that was removed for investors who buy established in 2017.
Those who build new can also claim a deduction for the cost of the build over 40 years, whereas those that buy established can only claim the remaining years.
Building new comes with the added benefit of drastically lower maintenance costs as compared to an existing property.
Buying new you are de-risking the investment as well, because you are limiting all of the maintenance costs that you might see when you buy an established property.
The oven or air conditioning might be on its last legs, so by buying new you not only get the depreciation but you are also de-risking the chance of having any potential issues down the track.
Having a builder’s warranty with a reputable builder is a big thing, if you have any structural issues.
There are other benefits when it comes to renting out a new house as opposed to an older home, if an investor is careful in choosing location.
You will find that the newer homes command a higher rent than the homes in the older areas.
If you partner up with the right developer and builder partner who can guide you towards the right estates and blocks of land, where you are buying pre-infrastructure, you have got more of a chance of capital growth as well.
If you know that you are going to buy somewhere that’s going to have a train station coming up soon or a new shopping centre or a new school is about to open, you can often get into that estate at a better price than if it’s an established suburb when you are buying post-infrastructure. While it could be still good, it might not be as good as getting in there before that stuff gets built.