PROPERTY TRICKS HOMEBUYERS NEED TO KNOW

Thinking of buying new or off the plan? Read this first

- Compiled by Amber Bramble.

When it comes to buying a property, choosing a brand new or off-the-plan development over an already established home isn't without its risks. It doesn't help that developers have an army of spruikers that know how to push our buttons and make promises that seem too good to resist.

Finance experts Bryce Holdaway and Ben Kingsley of thepropertycouch.com.au offer tips on seeing through the spin and making more informed decisions.

1 Tax and the depreciation allure

While depreciation can indeed offer tax benefits, it doesn't improve the intrinsic value of the property. Depreciation-focused pitches distract buyers from the main game - capital growth. If the property lacks scarcity or owner-occupier appeal, any tax benefits won't make up for poor long-term performance. Instead, you could invest in an established property in a better area and create depreciation benefits through a smart renovation - without sacrificing growth.

2 Tax and the holding cost illusion

Another common tactic is to downplay the cost of holding the property by factoring in its depreciation to make the numbers look appealing. The pitch usually goes like this, “With all the tax benefits, this property will cost you just $50 a week to hold.” While this sounds manageable, these numbers often fail to account for vacancy periods, rising interest rates or unexpected expenses.

3 The land-is-king myth