The Complete Guide to Buying Off-the-Plan Property in Australia (2026 Edition)

Buying off-the-plan Australia style has become one of the most talked-about pathways into the property market, whether you are a first home buyer chasing government incentives, an investor hunting for depreciation benefits, or a downsizer wanting a brand-new apartment without lifting a paintbrush. Yet for all its popularity, off-the-plan buying remains one of the least understood corners of Australian real estate.

This guide walks through everything a buyer needs to know in 2026 — from the legal definition of an off-the-plan contract through to settlement, defects periods, builder warranties, foreign investment rules, tax implications and a final checklist you can use before you sign anything. It is written for everyday Australians, not lawyers, so we have kept the language plain while still covering the detail that actually matters.

Whether you are comparing off-the-plan apartments in a capital city tower or a boutique low-rise development in a growth corridor, the fundamentals in this article apply nationally, with notes on where state and territory rules diverge.

1. What Is Off-the-Plan Property?

An off-the-plan property is a home you agree to buy before it has been built, or sometimes before construction has even started. Instead of walking through a finished apartment, you are buying from architectural plans, a display suite, a scale model, floor plans, and a schedule of finishes that sets out the fixtures, fittings, benchtops, flooring and appliances the finished home will include.

Legally, you are entering into a contract of sale for a property that does not yet physically exist in its final form. The contract describes what will be delivered, when it is expected to be delivered, and the standard to which it will be built. This is fundamentally different from buying an established home, where what you see is what you get.

Off-the-plan purchases are most common with:

Apartments and units in multi-storey developments
Townhouses in medium-density projects
House and land packages, where the land and the home are contracted separately or together
Boutique developments, typically smaller low-rise buildings with fewer dwellings

The term “off-the-plan” specifically refers to the timing of the purchase relative to construction, not the type of dwelling itself. You could buy an established house off someone who has already lived in it, or you could buy a brand-new apartment that is already complete and ready to move into — neither of those is “off-the-plan.” The defining feature of an off-the-plan purchase is that you sign the contract before construction is finished, and often before it begins.

How an off-the-plan contract differs from a standard contract

A standard residential contract in Australia usually settles within a matter of weeks. An off-the-plan contract can run for many months or even several years between the date you exchange contracts and the date of settlement, because settlement is tied to the completion of construction rather than a fixed calendar date. This single difference shapes almost every other aspect of the process, from how deposits are handled to how finance is arranged.

2. Why Australians Buy Off-the-Plan

There are several recurring motivations behind the decision to buy off-the-plan rather than an established home, and understanding your own “why” will help you evaluate whether it suits your circumstances.

Access to brand-new stock in established suburbs. In many well-located suburbs, particularly inner-city and middle-ring areas of major capitals, there is very little vacant land left. Off-the-plan apartments and townhouses are often the only way to secure a brand-new home in these locations.

Time to save while the deposit is locked in. Because settlement can be a long way off, buyers effectively “lock in” a purchase price and then have an extended period to continue saving, pay down other debts, or wait for their financial circumstances to strengthen before the balance is due.

Government incentives skew toward new dwellings. In most states and territories, first home buyer grants and generous stamp duty concessions are specifically targeted at new or off-the-plan property rather than established homes, because the policy intent is to stimulate new housing supply.

Depreciation and tax benefits for investors. A newly constructed dwelling generally offers substantially more scope for depreciation deductions on the building and its fittings than an older property, which can materially improve the after-tax return for investors.

Customisation. Buying early in the construction cycle can allow buyers to select colour schemes, finishes, and sometimes make layout adjustments that would be impossible or extremely costly in an established home.

Lower ongoing maintenance in the early years. A newly built home comes with builder warranties and modern building standards, meaning the early years of ownership typically involve fewer repair costs than an older property.

Of course, these advantages need to be weighed against real risks, which we cover in detail below.

3. Benefits

To expand on the motivations above, here is a more structured look at the practical benefits of buying off-the-plan.

Price certainty at the point of contract

When you exchange contracts, the purchase price is generally fixed (subject to any rise-and-fall clauses relating to statutory charges, which are uncommon in residential contracts but worth checking). If the broader market moves upward during the construction period, you benefit from having secured today’s price for a home you will not take possession of for some time.

Concessional stamp duty and grants

Because most jurisdictions offer stamp duty concessions or exemptions on new and off-the-plan homes, and because grants such as the First Home Owner Grant are usually restricted to new dwellings, the effective cost of entry can be considerably lower than for an equivalent established property.

Depreciation benefits for investors

Under Australian tax law, investors can claim depreciation on the building’s structure (capital works deductions) and on plant and equipment within the property. A brand-new building offers the maximum available depreciation schedule, which can meaningfully improve cash flow for investment purchasers, particularly in the first decade of ownership.

Modern design, efficiency and warranties

New developments are built to current building codes, which increasingly include requirements around energy efficiency, accessibility and sustainability. Buyers also benefit from statutory builder warranties (explored later in this guide) that do not apply to older housing stock.

A longer runway to organise finances

The gap between exchange and settlement — commonly between one and three years for larger developments — gives buyers time to save additional funds, pay down existing debts, or allow their income to grow, all of which can improve the loan-to-value ratio and borrowing position by the time finance is formally required.

Flexibility to select finishes

Depending on how early you buy and the developer’s approach, you may be able to choose from a range of colour schemes, joinery finishes, or appliance packages, giving the finished home a more personal feel than a display-only completed apartment.

4. Risks

No responsible property buying guide would be complete without a clear-eyed look at the risks. Off-the-plan purchasing carries genuine exposures that established property buyers simply do not face.

Construction delays

Weather events, labour shortages, supply chain disruption, and disputes between developers and builders can all push completion dates back. Most contracts include an outer “sunset date,” but delays within that window are common and are usually not compensable.

Builder or developer insolvency

If the builder or developer becomes insolvent before completion, the project can stall indefinitely or collapse entirely. While state-based security of payment and insurance regimes offer some protection, buyers can still face significant delay, cost and uncertainty in these situations.

Valuation shortfall at settlement

Because the purchase price is set at exchange but the property is valued closer to settlement (for finance purposes), there is a risk the bank’s valuation comes in lower than the contracted price, particularly if the market has softened during construction. This can leave a buyer needing to find additional funds or renegotiate finance.

Finance risk

Lending criteria, interest rates and your own financial circumstances can all change materially between exchange and settlement, which may be years apart. A loan pre-approval obtained at the time of exchange is not a guarantee of finance at settlement.

The finished product may differ from what was marketed

Contracts typically allow developers a degree of latitude to make minor changes to specifications, finishes, or even aspects of the floor plan, provided the changes are not “material.” What counts as material is not always straightforward, and disputes can arise.

Sunset clause risk

If a project runs so far behind schedule that it passes its sunset date, either party may, in some circumstances, be entitled to rescind the contract. This has occasionally been used by developers to exit contracts in a rising market and resell at a higher price — a practice that has attracted regulatory attention and, in several states, specific legislative restrictions.

Body corporate and strata risk

Once the building is complete, the buyer becomes a member of the owners corporation (strata scheme). Defects, poor initial financial planning by the developer, or disputes among owners can all affect the ongoing cost and experience of ownership.

The remainder of this guide is designed to help you manage each of these risks methodically, starting with the buying process itself.

5. Step-by-Step Buying Process

Buying off-the-plan follows a distinct sequence that differs from an established property purchase. Below is the typical journey from research to keys-in-hand.

Step 1 — Research the market and the developer. Look closely at the developer’s track record, the builder engaged for the project, the location’s fundamentals (transport, employment, schools, infrastructure pipeline) and comparable sales in the area.

Step 2 — Shortlist developments and inspect the display suite. Visit the sales office, review the model, and ask detailed questions about specifications, timelines and inclusions.

Step 3 — Engage a solicitor or conveyancer before signing anything. Off-the-plan contracts are lengthy and contain clauses that materially affect your rights. Have the contract reviewed before you commit, not after.

Step 4 — Negotiate and exchange contracts. Once satisfied, you sign the contract of sale and pay your initial deposit. In most states there is a cooling-off period, although this can be shorter for off-the-plan purchases or waived entirely in some circumstances — always confirm this with your solicitor.

Step 5 — Arrange your finance pre-approval. Speak with a mortgage broker or lender early so you understand your borrowing capacity and any conditions attached to lending on off-the-plan property.

Step 6 — Monitor construction progress. Reputable developers provide periodic updates. This is also the time to stay in contact regarding any variation notices.

Step 7 — Receive notice of practical completion. The developer notifies you that construction is nearing completion and provides a settlement date, generally with a fixed notice period (commonly around two to four weeks, though this varies by contract and state).

Step 8 — Convert your pre-approval to unconditional finance approval. Your lender will order a valuation of the completed (or near-complete) property and finalise your loan.

Step 9 — Conduct a pre-settlement inspection. Walk through the finished home with your conveyancer’s guidance (or a building inspector) to identify defects before settlement.

Step 10 — Settle. Funds are exchanged, title transfers, and you receive the keys.

Step 11 — Move through the defects liability period. Report and track any defects that emerge during the specified defects period following settlement.

We now examine several of these steps — deposits, stamp duty, grants, finance, settlement, defects and warranties — in far greater depth.

6. Deposits Explained

The deposit structure for off-the-plan property is one of the most misunderstood elements of the process, and it differs meaningfully from a standard purchase.

How much deposit is typically required

Off-the-plan contracts commonly require a deposit expressed as a percentage of the purchase price, generally in the region of 10 per cent, although this varies by developer, by state, and by the stage of the project (early-release stock is sometimes offered with a reduced deposit to encourage early sales). Some developers offer deposit bonds as an alternative to a cash deposit, which we cover below.

Where the deposit is held

In most states, deposit funds must be held in a trust account, either by the developer’s solicitor, a stakeholder, or (in some jurisdictions) the relevant land titles or fair trading authority, until settlement occurs. This protects the buyer’s funds during the (sometimes lengthy) construction period. Always confirm exactly how and where your deposit will be held before signing.

Deposit bonds

A deposit bond is a form of insurance that acts as a substitute for a cash deposit. Instead of paying cash upfront, the buyer pays a smaller fee to a deposit bond provider, who guarantees the developer will receive the deposit amount at settlement if the buyer defaults. Deposit bonds can be useful for buyers whose funds are tied up (for example, awaiting the sale of an existing property) but they are not accepted by every developer, and they come at a cost that is not refunded even though no actual deposit changes hands.

When the balance is paid

The remaining balance of the purchase price — after the deposit — is paid at settlement, funded through a combination of the buyer’s own funds and their approved mortgage.

Split contracts

Some off-the-plan arrangements, particularly house and land packages, involve a “split contract”: one contract for the purchase of the land and a separate building contract for construction of the dwelling. This structure has stamp duty implications, discussed later, and typically involves progress payments during construction rather than a single deposit-and-balance structure. We explore this further in the FAQ section.

7. Stamp Duty

Stamp duty (also called transfer duty in some states) is a state or territory government tax charged on the transfer of property. It is one of the largest upfront costs in any property purchase, and off-the-plan buyers are often eligible for concessions not available on established homes.

Why off-the-plan concessions exist

State governments generally want to encourage new housing supply, so many jurisdictions offer reduced duty, deferred payment, or full exemptions for new and off-the-plan property, particularly for owner-occupiers and first home buyers. The scope and size of these concessions vary considerably between states and change relatively often, so always check the current settings with your state revenue office or conveyancer before relying on a particular figure.

General principles that apply across most states

First home buyers typically receive the most generous treatment, often including a full exemption up to a certain property value and a partial concession above that threshold.
Owner-occupier investors (buying to live in) are usually treated more favourably than pure investors, though not universally.
Off-the-plan concessions in several states allow duty to be calculated on the land value alone (rather than land plus construction), or allow duty to be deferred until settlement or completion rather than paid at the time of exchange, which materially improves cash flow during a long construction period.
Foreign buyers face an additional surcharge on top of standard duty in every state and territory, generally calculated as a percentage of the property’s value (see Section 13 on FIRB rules).

How and when duty is paid

For most off-the-plan purchases, stamp duty is assessed and paid around the time of settlement rather than at exchange, though the exact timing rules differ by state. Because these rules are genuinely state-specific and subject to periodic reform, this guide deliberately avoids quoting specific thresholds or figures — always verify the current position with your solicitor or your state’s revenue office before budgeting for your purchase.

8. Government Grants

Beyond stamp duty concessions, several government grant and shared-equity schemes are available to eligible buyers, and off-the-plan and new property purchases are typically the primary beneficiaries.

First Home Owner Grant (FHOG)

Each state and territory administers its own First Home Owner Grant, a one-off payment available to eligible first home buyers purchasing or building a new home. Because the FHOG was originally introduced to offset the impact of the GST on new housing, it is generally restricted to new or substantially renovated dwellings — meaning an off-the-plan purchase is often exactly the type of property that qualifies, while an established home purchase typically does not.

Eligibility conditions commonly include:

Never having previously owned residential property in Australia (rules on this vary by state)
Being an Australian citizen or permanent resident (with some allowance for co-applicants)
Moving into the home within a set period after settlement (commonly around twelve months)
Living in the property for a minimum continuous period afterwards

The First Home Guarantee (5% Deposit Scheme)

Administered federally through Housing Australia, the First Home Guarantee allows eligible first home buyers to purchase with a smaller deposit than would otherwise be required by a lender, without needing to pay Lenders Mortgage Insurance (LMI), because the government guarantees the shortfall to the lender. This scheme was significantly expanded from late 2025, broadening eligibility. It can be used for off-the-plan purchases, subject to the property and buyer meeting the scheme’s criteria.

Help to Buy (shared equity scheme)

The federal Help to Buy scheme is a shared equity arrangement under which the government contributes a portion of the purchase price of an eligible home in exchange for a corresponding equity share, reducing the amount the buyer needs to borrow. Eligibility is more tightly means-tested than the First Home Guarantee, and buyers generally cannot use Help to Buy and the First Home Guarantee for the same purchase — it is one or the other, though both can typically be combined with state grants and stamp duty concessions, subject to each scheme’s own rules.

First Home Super Saver Scheme (FHSSS)

This scheme allows buyers to make voluntary contributions into their superannuation fund and later withdraw a capped amount to help fund a first home deposit, taking advantage of the concessional tax treatment inside superannuation. It is a savings mechanism rather than a grant, but it is frequently used alongside the grants above.

State-based variations

Some states offer additional or alternative incentives — for example, larger grants in regional areas, or grants structured differently in the Northern Territory compared with duty relief in the ACT. Because these schemes are amended frequently (several changed during 2025 and 2026 alone), always check the current rules with your state’s revenue office, Housing Australia, or a qualified mortgage broker before you factor a grant into your budget.

Stacking schemes

Many buyers do not realise how many of these schemes can be combined. A single eligible purchase might potentially draw on a state grant, a stamp duty concession, and a federal deposit scheme simultaneously — provided each program’s separate eligibility rules are satisfied. This is one of the strongest arguments in favour of off-the-plan purchasing for first home buyers specifically, since new dwellings tend to attract the broadest range of available support.

9. Finance Approval

Financing an off-the-plan purchase involves extra complexity compared with a standard home loan, largely because of the gap between exchange and settlement.

Pre-approval versus unconditional approval

When you exchange contracts, most buyers obtain a conditional pre-approval from a lender, based on their financial position and an estimate of the property’s value at that time. This is not a guarantee. As settlement approaches — sometimes years later — you will need to convert this into unconditional (formal) approval, at which point the lender reassesses your financial circumstances, your credit history, and orders a fresh valuation of the completed property.

Why circumstances can change

Because of the length of time involved, a great deal can shift between exchange and settlement:

Your income, employment status, or existing debts may have changed
Lending policy and serviceability assessment criteria may have tightened or loosened
Interest rates may have moved, affecting how much you can borrow
The bank’s valuation of the finished property may differ from your contracted price

The valuation risk in detail

Lenders generally will not lend against the contract price alone; they order an independent valuation close to settlement. If that valuation comes in below the purchase price, the loan-to-value ratio calculation changes, and you may be required to either contribute a larger deposit from your own funds, seek a top-up loan, negotiate with the lender, or in some cases renegotiate with the developer. This is one of the most consequential risks in off-the-plan buying and is discussed further in the FAQs.

Choosing the right lender

Not all lenders treat off-the-plan lending identically. Some are more conservative about new apartment developments, particularly in areas seen as oversupplied, and may apply loan-to-value restrictions on certain postcodes or building types. Engaging a mortgage broker experienced in off-the-plan finance early in the process — ideally before you exchange contracts — is one of the most valuable steps a buyer can take.

Interest-only versus principal and interest during the build

Because settlement (and therefore the start of loan repayments) generally does not occur until construction completes, most buyers are not making mortgage repayments during the build phase — only the deposit has been paid. It is important to budget for the possibility that interest rates, and therefore your repayment obligations, could be materially different by the time settlement finally arrives.

10. Settlement

Settlement is the formal legal process by which ownership of the property transfers from the developer to the buyer, and it looks somewhat different for off-the-plan purchases than for established homes.

Notice of completion

Once the building has reached practical completion — meaning it has passed the relevant building certification and is ready for occupation — the developer issues a formal notice to all purchasers specifying the settlement date. This notice period is set out in the contract and is typically measured in weeks rather than months, so buyers need to be finance-ready well in advance.

Registration of the plan of subdivision or strata plan

Before settlement can occur for an apartment or townhouse in a multi-dwelling development, the plan of subdivision (or strata/community title plan, depending on the state) must be registered with the relevant land titles office. This is a common source of delay, as registration timing depends on government processing as much as on the builder’s construction schedule.

The pre-settlement inspection

Shortly before settlement, buyers are typically entitled to inspect the completed property to check it matches the contract specifications and to identify any obvious defects. This is a critical step — covered in more detail in Section 11 — and buyers should attend in person wherever possible, ideally with a qualified building inspector.

What happens on settlement day

On settlement day, the buyer’s solicitor or conveyancer coordinates with the developer’s representative and the buyer’s lender to exchange the balance of funds for the transfer of title. Adjustments are typically made for rates, water charges and other outgoings apportioned from the settlement date. Once funds have changed hands and the transfer is registered, keys are released and the buyer becomes the legal owner.

Practical preparation for settlement

Buyers should arrange building and contents insurance to commence from settlement, confirm final loan documentation well ahead of the settlement date, and budget for settlement adjustments and any outstanding costs (such as legal fees and government charges) that fall due at this point.

11. Defects Period

Once you have settled and moved in (or handed the property to a tenant), the story is not quite over. New buildings typically go through a defects liability period during which the builder is obligated to rectify issues that arise from the construction.

What counts as a defect

A defect is generally a fault in workmanship or materials that does not meet the standard required by the building contract, relevant building code, or applicable warranty legislation. This can range from minor cosmetic issues (paint touch-ups, minor cracking, doors that do not close properly) through to more significant structural or waterproofing problems.

Typical timeframes

Defects periods vary depending on the state, the type of defect, and the specific contract, but as a general pattern:

General defects are often subject to a shorter reporting window, commonly measured in months after settlement, during which the builder is expected to attend to reported issues.
Structural defects are typically covered by statutory home warranty insurance or builder warranty schemes for a much longer period, often extending several years from the date of completion.

Because these periods differ by jurisdiction and by the type of defect, buyers should read their contract and the applicable state home warranty legislation carefully rather than assuming a uniform national standard.

How to report defects

Most developers and builders provide a formal process for logging defects, often through an online portal or a dedicated defects liaison contact. It is worth documenting everything in writing (with photographs and dates) rather than relying on verbal conversations, both to create a clear record and to support any later insurance or dispute resolution process if the builder is slow to respond.

Common apartment defects to look out for

Water ingress or waterproofing failures, particularly around balconies, bathrooms and roof lines
Cracking in walls or cornices as the building settles
Poorly fitted joinery, cabinetry or benchtops
Air-conditioning, ventilation or plumbing faults
Fire safety system issues, particularly in larger multi-storey buildings
Noise transmission between units, which can indicate inadequate acoustic insulation

Owners corporation involvement

For common property defects (lifts, lobbies, roofs, shared services), the owners corporation (strata committee) typically manages the process on behalf of all owners, often engaging an independent building consultant to prepare a defects report before the builder’s statutory liability period expires. As a new owner, it is worth asking whether such a report has already been commissioned and what its findings were.

12. Builder Warranties

Separate from the negotiated defects process above, builders in Australia are required by law to provide statutory warranties on new residential construction, and in most states this is backed by compulsory home warranty insurance.

What builder warranties typically cover

While the exact wording differs by state, statutory warranties generally require that the building work:

Is performed in a proper and workmanlike manner
Uses materials that are new and suitable for the purpose
Complies with the relevant building code and other laws
Is fit for the purpose for which it is intended
Will be completed within an agreed time (subject to contractual variations)
Will not have defects due to faulty workmanship or materials for a specified statutory period

Structural versus non-structural cover

Most warranty regimes distinguish between “structural” defects (affecting the load-bearing or waterproofing integrity of the building) — which carry the longest cover, often measured in years — and “non-structural” defects, which typically carry a shorter warranty period.

Home warranty insurance

Home warranty insurance (sometimes called home building compensation insurance, depending on the state) is designed to protect buyers if the builder dies, disappears, becomes insolvent, or fails to rectify defects covered by the statutory warranty. This insurance is generally compulsory for residential building work above a certain contract value, and evidence of the policy is typically required to be provided to the buyer.

What builder warranties do not cover

It is worth understanding the limits of these protections. Warranties generally do not cover:

Fair wear and tear
Damage caused by the owner or a third party after settlement
Changes in taste or dissatisfaction with a design choice that was disclosed and agreed in the contract
Normal settling or minor shrinkage cracking that falls within accepted building tolerances

Multi-storey apartment buildings and building bonds

Following high-profile building defect issues in several states over recent years, some jurisdictions have introduced additional protections specifically for apartment buildings — for example, requiring developers to lodge a building bond (a portion of the contract price held to cover defect rectification) or to obtain independent building inspections at key construction milestones before an occupation certificate is issued. These reforms are evolving, so it is worth asking your conveyancer what specific protections apply in your state for the type of building you are purchasing into.

13. FIRB Rules

Foreign investment in Australian residential property is closely regulated, and the rules changed significantly in 2025 and again through the 2026–27 Federal Budget, making this section particularly relevant for a 2026 buying guide.

The current position

Since 1 April 2025, foreign persons — including temporary residents and foreign-owned companies — have generally been prohibited from purchasing established residential dwellings in Australia, subject to limited exceptions. This ban was originally set to run for two years but has since been extended, with the government confirming in the 2026–27 Budget that it will remain in place until 30 June 2029.

Critically for the purposes of this guide, the ban applies to established dwellings, not to new or off-the-plan property. This means off-the-plan apartments and new house and land packages remain a genuinely open avenue for eligible foreign buyers, generally subject to standard Foreign Investment Review Board (FIRB) approval requirements.

Who needs FIRB approval

Foreign persons — a term that can capture individuals on temporary visas, non-residents, and companies or trusts with substantial foreign ownership or control — generally require approval before acquiring residential land in Australia, regardless of the property’s value. New Zealand citizens are a notable exception and are not subject to the same requirements as other foreign nationals.

The application process

Residential FIRB applications are lodged and administered through the Australian Taxation Office. Approval is granted subject to conditions, which can include development timeframes for vacant land and reporting obligations once the property is acquired. Approval under FIRB does not remove or reduce any state-based foreign buyer surcharges — these are separate and additional.

State-based surcharges

On top of standard stamp duty, every state and territory imposes an additional foreign buyer duty surcharge, and most also apply an annual land tax surcharge for foreign owners. These surcharges are calculated as a percentage loading on top of standard rates and vary between jurisdictions, so foreign buyers should factor this into their overall cost planning and confirm current rates with a specialist advisor, since these settings are also reviewed periodically.

Why this matters for off-the-plan buyers specifically

Because established dwellings are currently off-limits to most foreign buyers, off-the-plan and new-build stock has effectively become the primary legal pathway for foreign investment in Australian residential property. This has implications for demand dynamics in developments that are actively marketed to overseas buyers, and it is a relevant factor for local buyers to understand when assessing a development’s likely purchaser mix and, in turn, its future resale market.

14. Tax Considerations

Beyond stamp duty and FIRB surcharges, there are several ongoing tax considerations relevant to off-the-plan buyers, particularly investors.

Goods and Services Tax (GST)

New residential property sold by a developer generally includes GST within the contract price — buyers are not usually required to pay GST separately on top of the advertised purchase price for a new apartment bought directly from a developer, because the developer accounts for GST as part of the transaction under the margin scheme or standard GST rules. It is worth confirming in the contract whether the price is GST-inclusive and whether the margin scheme applies, as this affects the developer’s own tax position rather than typically requiring extra action from the buyer, but it is a point worth clarifying with your solicitor.

Depreciation for investors

As noted earlier, investors purchasing off-the-plan can generally access the maximum available depreciation schedule because the building is new. This includes capital works deductions on the structure of the building (claimed over an extended period) and depreciation on plant and equipment such as appliances, carpets and air-conditioning systems (claimed over their effective life). A qualified quantity surveyor can prepare a formal depreciation schedule to support these claims.

Negative gearing

Where the costs of owning an investment property (loan interest, strata fees, management fees, depreciation, and other holding costs) exceed the rental income received, the shortfall may be deductible against other income, subject to the investor’s overall tax position — a strategy commonly referred to as negative gearing. Off-the-plan investment properties are frequently structured with this strategy in mind, given the strength of available depreciation deductions in the early years of ownership.

Capital gains tax (CGT)

When an investment property is eventually sold, any capital gain is generally subject to capital gains tax, with a discount typically available for properties held longer than twelve months by individuals. For off-the-plan purchases, it is important to understand that the CGT holding period is usually calculated from the date of the original contract of sale (exchange), not from settlement — meaning the “clock” may already be running well before you actually own the property outright, which can be advantageous for buyers who intend to hold for the long term.

Land tax

Once you own the property, ongoing state land tax may apply, depending on the total value of land you hold in that state and whether the property is your principal place of residence (which is typically exempt) or an investment (which is typically not). Foreign owners, as noted above, often face an additional land tax surcharge.

Seeking professional advice

Tax treatment depends heavily on individual circumstances, entity structure (personal name, trust, company or self-managed superannuation fund) and the specific state involved. This section is general in nature; buyers — particularly investors — should seek advice from a qualified accountant or tax adviser before and during an off-the-plan purchase.

15. Investment Potential

For many buyers, the central question is simple: does off-the-plan property make a good investment? The honest answer is that it depends heavily on the specific development, location and buyer strategy — but there are some general principles worth understanding.

Capital growth drivers

Off-the-plan property performs best, over time, where the underlying fundamentals of the location are strong: proximity to employment hubs, quality transport links, planned infrastructure investment, good schools, and constrained future supply. A well-located off-the-plan apartment in an area with genuine long-term demand drivers is a different proposition entirely from an oversupplied tower in a location with limited owner-occupier appeal.

Rental yield considerations

New apartments, particularly those with modern amenities and efficient layouts, can command competitive rental yields, and tenants are often drawn to newer buildings for their presentation and included features. That said, in areas experiencing a wave of new apartment completions at the same time, rental growth and vacancy rates can be temporarily affected by the sheer volume of new supply entering the market together.

The risk of oversupply

One of the more important lessons from past property cycles in Australia is that concentrated apartment construction in a small number of postcodes can lead to short-to-medium-term price softness as large numbers of similar units settle around the same time. Buyers should research the total pipeline of comparable developments in the immediate area, not just the specific building they are considering.

Owner-occupier appeal versus investor-heavy buildings

Buildings that attract a strong proportion of owner-occupiers tend to be better maintained, better governed through the owners corporation, and often achieve steadier long-term capital growth than buildings dominated by investors, where absentee ownership can lead to lower engagement in building management. It is worth asking the sales team, and researching independently, what proportion of the development has been marketed to investors versus owner-occupiers.

Comparing off-the-plan to established property as an investment

Off-the-plan investment typically offers stronger depreciation benefits and lower initial maintenance costs, while established property often offers more certainty (you know exactly what you are buying), typically better land content relative to building (particularly for houses), and a shorter time to rental income, since there is no construction period to wait through. Neither is inherently superior; the right choice depends on the investor’s goals, timeframe and risk tolerance.

Assessing a development before committing

Before investing in a specific off-the-plan project, it is worth methodically working through:

The developer’s and builder’s completed track record on similar projects
Independent research on the suburb’s supply pipeline and demographic trends
The proposed body corporate budget and any special levies flagged for the early years
Comparable rental and resale evidence for similar existing buildings nearby
The strength and clarity of the sunset clause and contract terms

16. Frequently Asked Questions

1. What does off-the-plan mean? It means buying a property under a contract of sale before construction is complete — sometimes before it has even started — based on plans, specifications and a schedule of finishes rather than a finished, inspectable home.

2. Is buying off-the-plan a good investment? It can be, particularly where the location has strong long-term fundamentals and the development is well-conceived, but it carries construction, valuation and market-timing risks that established property does not. Careful due diligence on the developer, builder and local supply pipeline is essential.

3. How much deposit is required? Deposits are typically expressed as a percentage of the purchase price, commonly in the order of 10 per cent, though this varies between developers and projects. Some developers also accept deposit bonds instead of cash.

4. When do I pay the balance? The balance of the purchase price is paid at settlement, once construction is complete and the plan of subdivision (or strata plan) has been registered.

5. Can I use a mortgage? Yes. Most buyers arrange a conditional pre-approval at the time of exchange and then convert this to unconditional finance approval closer to settlement, once the lender has valued the completed property.

6. What happens if property prices fall? If the market softens before settlement, the contracted purchase price does not change — you are still obligated to complete the purchase at the agreed price. This can also affect the bank’s valuation at settlement, potentially requiring a larger contribution from your own funds.

7. What happens if the property value increases? You benefit, because you locked in the purchase price at exchange. The property may settle at a value higher than what you contracted to pay, effectively creating equity from day one.

8. Can I sell before settlement? This depends on the contract terms. Some contracts prohibit “nomination” or on-selling before settlement, while others allow it under specific conditions, sometimes with a fee payable to the developer. Always check this clause before assuming you can exit early.

9. What is a sunset clause? A sunset clause sets an outer date by which the development must be completed and registered. If that date passes without completion, the contract may allow either party (depending on the wording and the state’s specific legislation) to rescind the contract.

10. What happens if the project is delayed? Delays within the sunset date are generally not a breach of contract and typically do not entitle the buyer to compensation, unless the contract specifically provides for it. If the sunset date itself is missed, buyers should seek legal advice about their options.

11. Can the developer change the floor plan? Most contracts permit the developer to make minor variations to the plans, specifications or finishes, provided the changes are not “material.” What constitutes a material change is a common source of dispute and is worth clarifying with your solicitor before signing.

12. How long does construction usually take? This varies enormously by project size and complexity, ranging from around a year for smaller townhouse developments to several years for large multi-storey towers.

13. Can foreign buyers purchase off-the-plan? Generally, yes. While foreign persons are currently restricted from buying established dwellings, new and off-the-plan property remains an available pathway, subject to standard FIRB approval and applicable state-based foreign buyer surcharges.

14. Do I pay stamp duty? Yes, in most cases, although many states offer concessions, exemptions or deferred payment arrangements for new and off-the-plan property, particularly for first home buyers and owner-occupiers. Rules vary by state and change periodically, so confirm current settings with your conveyancer.

15. Are there government grants available? Potentially, yes — most notably the First Home Owner Grant, which is generally restricted to new dwellings and is therefore often available for off-the-plan purchases by eligible first home buyers.

16. Can first home buyers purchase off-the-plan? Yes, and off-the-plan property is often especially attractive to first home buyers because it can combine eligibility for grants, stamp duty concessions and federal deposit assistance schemes in a way established property purchases cannot always match.

17. Is GST included in the purchase price? Generally, yes — new residential property sold by a developer typically has GST accounted for within the advertised contract price, rather than charged separately to the buyer, though it is worth confirming this explicitly in the contract.

18. Can I choose colours and finishes? Often, particularly if you buy early in the sales campaign. Developers frequently offer a limited range of colour schemes or finish packages, though options usually narrow or close entirely as construction progresses.

19. What defects are covered after settlement? Faults in workmanship or materials that fall short of the standard required by the building contract, relevant building code, or statutory warranty legislation — ranging from minor cosmetic issues through to more serious structural or waterproofing defects, each typically subject to different reporting timeframes.

20. What warranties do builders provide? Statutory warranties requiring the work to be performed competently, using suitable materials, in compliance with the building code and fit for its intended purpose, generally backed by compulsory home warranty insurance, with longer cover for structural defects than for non-structural issues.

21. Can my loan be declined before settlement? Yes. Because of the extended time between exchange and settlement, a lender may decline unconditional finance if your circumstances have changed materially, if lending policy has tightened, or if the property’s valuation comes in significantly below the contract price.

22. What happens if interest rates increase? Your borrowing capacity and future repayments are affected, since your loan is not typically formalised until closer to settlement. It is sensible to stress-test your budget against higher interest rates than those in effect at the time you exchange contracts.

23. How is the property valued? The lender arranges an independent valuation of the completed (or near-complete) property closer to settlement, generally based on comparable sales evidence, to confirm the loan amount they are prepared to advance.

24. What if the valuation is lower than the purchase price? You will typically need to make up the shortfall from your own funds, seek additional lending (if serviceable), negotiate with the lender or developer, or in limited circumstances explore your contractual options — this is a genuine risk worth planning for in advance.

25. Can I rent the property immediately after settlement? Generally, yes, once you hold clear title and any lease is prepared and executed in the usual way, subject to any specific owners corporation by-laws affecting leasing (such as minimum lease term rules in some buildings).

26. How much are strata fees? Strata (owners corporation) fees vary widely depending on the building’s amenities, size, and the scope of shared facilities, and are set out in the body corporate’s budget. Ask for the proposed or actual budget before purchasing so you can assess ongoing costs realistically.

27. Are pets allowed in new apartments? This depends on the building’s by-laws, which are set by the owners corporation and can vary considerably between developments. Always check the specific by-laws (or proposed by-laws, for an off-the-plan purchase) rather than assuming.

28. Can I make changes after buying? Structural or material changes are generally not possible once construction has locked in, though minor selectable finishes may still be available depending on how far along the build is at the time of your purchase.

29. Is an off-the-plan apartment better than an existing apartment? Neither is universally “better” — off-the-plan offers depreciation benefits, modern design and warranty protection but carries construction and settlement risk, while an existing apartment offers certainty and immediate occupancy but with fewer tax and warranty advantages. The right choice depends on your goals.

30. What should I check before signing the contract? The sunset clause, deposit arrangements, variation and material change provisions, the schedule of finishes, disclosure statements, the developer’s and builder’s track record, and — critically — have a solicitor or conveyancer review the entire contract before you sign.

31. What is a split contract, and how does it work? A split contract separates the purchase of land from the construction of the dwelling into two distinct legal agreements, commonly used for house and land packages. It can have stamp duty implications (duty is sometimes calculated on the land component alone) and typically involves progress payments to the builder during construction rather than a single balance paid at settlement.

32. What are the ongoing costs of owning an off-the-plan property? Beyond mortgage repayments, buyers should budget for strata or owners corporation fees, council rates, water charges, building insurance (or contribution to it via strata), land tax if applicable, and ordinary maintenance once builder warranties expire.

33. How do I compare different off-the-plan developments? Look at the developer’s and builder’s completed history, the location’s infrastructure and supply pipeline, the proposed strata budget, the quality and specificity of the schedule of finishes, sunset clause terms, and independent research on comparable rental and resale evidence nearby.

34. What should I know about the developer before buying? Their track record of delivering projects on time and to specification, their financial standing, whether previous projects have faced defect disputes, and — where possible — feedback from owners in their earlier completed developments.

35. What documents should I review before committing to a purchase? The contract of sale, disclosure statement, schedule of finishes, plan of subdivision or strata plan, proposed owners corporation budget and by-laws, and any relevant building or planning approvals — ideally all reviewed with a solicitor or conveyancer.

36. How does settlement work for off-the-plan properties? Settlement occurs once construction reaches practical completion and the strata or subdivision plan is registered. The developer issues a formal notice specifying the settlement date, after which the buyer finalises finance, completes a pre-settlement inspection, and exchanges funds for title on the settlement date.

37. What happens during the pre-settlement inspection? The buyer (ideally with a building inspector) walks through the completed property to check it matches the contract specifications and to identify defects, which are then logged with the developer for rectification, generally either before or shortly after settlement.

38. Can I nominate another buyer before settlement? Some contracts permit “nomination,” allowing the original buyer to have the property transferred to another party (such as a related entity or family member) at settlement, sometimes subject to developer consent and a fee. This is different from on-selling the contract and should be confirmed with your solicitor.

39. What taxes should investors consider when buying off-the-plan? GST treatment (generally handled within the contract price by the developer), depreciation entitlements, negative gearing, capital gains tax on eventual sale (with the holding period typically running from the original contract date), and ongoing state land tax.

40. How can I reduce the risks of buying off-the-plan? Engage a solicitor before signing, thoroughly research the developer and builder, avoid overexposure to a single postcode with a heavy supply pipeline, budget conservatively for potential valuation shortfalls and interest rate movements, keep detailed records throughout the defects period, and avoid stretching your finances to the point where you have no buffer if circumstances change before settlement.

17. Final Buying Checklist

Before you exchange contracts on an off-the-plan property, work through this checklist:

Researched the developer’s and builder’s track record on previous projects
Reviewed the suburb’s supply pipeline for comparable developments
Had the contract of sale reviewed by a solicitor or conveyancer
Understood the sunset clause and what happens if it is triggered
Confirmed how and where the deposit will be held
Checked whether a deposit bond is accepted, if relevant to your situation
Clarified the variation and “material change” provisions in the contract
Reviewed the schedule of finishes in detail
Confirmed eligibility for any applicable grants, stamp duty concessions or federal deposit schemes
Spoken with a mortgage broker about pre-approval and the risk of valuation shortfall at settlement
Understood the expected strata or owners corporation budget and by-laws
Confirmed the defects reporting process and statutory warranty periods that will apply
Considered depreciation, negative gearing and capital gains tax implications with an accountant, if buying as an investment
Checked FIRB and state surcharge requirements, if purchasing as a foreign buyer
Budgeted conservatively for the possibility of higher interest rates by the time settlement arrives
Planned to attend the pre-settlement inspection in person, ideally with a building inspector

Buying off-the-plan in Australia can be a genuinely rewarding way to secure a brand-new home or investment property, particularly for first home buyers able to combine grants, concessions and federal deposit assistance in ways that established property purchases often cannot match. The key to a successful outcome is patience, thorough due diligence at every stage, and professional advice from a solicitor, mortgage broker and accountant before you commit. With careful preparation, the long runway between exchange and settlement becomes an advantage rather than a source of anxiety — giving you time to plan, save and settle into your new home or investment with confidence.

This guide is general in nature and does not constitute legal, financial or tax advice. Rules on stamp duty, government grants, FIRB requirements and lending criteria change periodically and vary by state and territory — always confirm current settings with a qualified solicitor, mortgage broker, accountant or your state revenue office before making a purchasing decision.

Buying property is a significant step, but it doesn’t have to be complicated. With the right preparation and support, you can navigate the Australian real estate marketplace with clarity and confidence.

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