Off the Plan Concession – An Incentive for Buyers of Property
More and more individuals are buying off the plan properties because of the many benefits and advantages doing so entails. For starters, people want to gain the peace of mind knowing that they will have some form of control over the design of their dream property as they can closely examine whether the property plan conforms to their standards or ideal design or not. Rather than being left with very few choices, buying off the plan apartments, houses, and other real estate can provide exemplary selection especially when done early in the process. Additionally, cost considerations will also be a major consideration especially in the light of the development project being located in an area where economic activity is projected to skyrocket within the next several years. Moreover, you do get concessions from the government even if your property is not yet physically present.
An off the plan concession is technically what the government is willing to provide, offer, or pay you in exchange for buying the property; although, they will not actually pay you in the strictest sense but they will give you some form of an incentive for your purchase. Think of it this way, it is a preferential rate or allowance given to you by the government whenever you purchase a property.
But why would the government do that?
It’s an incentive. It’s like other grants, duty reductions, and exemptions given to society to help entice the public to purchase. The more people buying property the greater the demand for such properties and the more that real estate developers have to meet and supply this growing demand. This spurs economic development simply because investors – both foreign and domestic – would want a stable and thriving infrastructure for them to be enticed into putting their money in the market. Now, people will not buy property if the cost is way too prohibitive. But this can be offset by giving them something highly beneficial. One of these is an off the plan concession.
So, an OTP concession talks about how much money will be deducted from the contract price of your property to come up with the final amount of duty that you are going to pay. The amount of the concession is typically computed based on the cost of the construction of the property or the cost of refurbishment or any improvements that can occur on or after the property’s contract date. In many cases, the concession amount that is deducted from your property’s contract price will be reflected in the duties imposed on the non-deductible costs, the overall improved or increased value of the land or property, and the completed property construction or refurbishment.
Before you apply for the OTP concession it is important to understand what types of property qualifies for such a contract. This includes properties that are not yet constructed or have not yet begun construction as well as ongoing building construction projects where it is assessed that the project is not yet substantially completed. It also includes existing properties that are geared for refurbishment and that the refurbishment either has yet to commence or has already commenced but not yet substantially completed.
Applying for an off the plan concession is pretty straightforward. You need to fill up an Off the Plan Sales Statutory Declaration Form and make sure you furnish all the correct information. This includes details of the property title, unit trust, construction costs, entitlement details, and/or other pertinent information. It is often advisable to have all pertinent documents on hand to make the accomplishment of the declaration a lot easier and accurate. Once completed, you need to make sure that you have affixed your signature on the space provided and it is a must that the declaration be witnessed by a competent person before you can file or lodge it with the appropriate agency. Usually this is done through a solicitor or a financial institution who are legally recognised as lodging agents. They will be the ones to lodge your declaration together with any other supporting documentation.
Now, it is also possible to lodge the declaration yourself but you will have to check with the existing guidelines of your local government. For example, individuals in Victoria can file or lodge their application for off the plan concession after registering with the local government’s online facility. Individuals are expected to have all of their documents properly scanned to be sent as attachments to the formal lodging of the declaration. The documents are verified and the off the plan concession amount calculated. The individual is then notified by mail about his or her duty assessment. This means that you have to keep this for record purposes.
Buying off the plan properties provide you with a lot of benefits and incentives. One of these is an off the plan concession which can translate to additional savings on your part. Please don’t hesitate to contact Chilli Realty on 03 9482 7440 if you have any questions.