Off-the-plan investing can work and in 2026, the Federal Budget has given it a new relevance for investors who want to keep their negative gearing benefits. But it comes with real risks that don’t get enough airtime: build quality you can’t inspect, timelines that stretch, and valuations that may not stack up at the end.
This is not a pitch for or against it. It’s an honest look at both sides so you can make a clear-eyed decision.
The Elephant in the Room
I want to start with something that most off-the-plan articles won’t say. A lot of experienced investors don’t like off-the-plan. And they have good reasons.
They’ve watched the industry long enough to see projects stall, developers go under, and buyers receive keys to apartments that look nothing like the brochure. They’ve seen valuations come in short at settlement whichleaves buyers to scramble for extra cash or walk away from deposits. They’ve heard about build quality that didn’t survive the first winter. They’ve waited three years for a “24-month build.”
These aren’t irrational fears. They’re the accumulated observations of people who’ve paid attention.
And now, thanks to the 2026 Federal Budget, those same investors are facing a real tension. If you want to continue enjoying negative gearing benefits on new investment property purchases, the kind that has structured many portfolios for years, the government has pointed you squarely at new builds. Established properties no longer qualify under the proposed rules from 1 July 2027.
So, the question a lot of investors are sitting with right now is: do I wear the tax hit on established property, or do I take on the risks of a build I can’t fully see or control?
That’s a hard question. And it deserves a real answer: not a sales pitch.
“A lot of experienced investors don’t like off-the-plan. And they have good reasons. The question is whether those reasons still outweigh the new reality.”
What Off-the-Plan Means
Off-the-plan means buying a property before it exists. Signing a contract today for a house, townhouse, or apartment that hasn’t been built yet. In most cases, you’ll pay a deposit (typically 10%) and then wait for construction to complete which might be 12 months away, or it might be 36.
Settlement happens when the build is complete and the title is registered. That’s when the rest of your purchase price is due, your mortgage kicks in, and the property becomes yours.
The interval between signing and settling is both the opportunity and the risk. Everything that happens in between matters – from the market to the developer, to your personal circumstances, to interest rates.
House and land packages vs strata off-the-plan
A house and land package (where you buy the land and then contract separately for a build) is different to buying off-the-plan in a strata development (apartments, townhouses). With house and land, you own the land from day one and stamp duty is calculated on the land value only. With a strata off-the-plan purchase, you own nothing until settlement. The risks and stamp duty treatment differ between the two. Make sure your solicitor explains which structure you’re entering into.
The Genuine Advantages — When They Apply
I’m going to give you the upside honestly and not to sell you on it, but because it’s real and it’s important that you understand it clearly.
Price lock-in in a rising market
You agree on a purchase price today. If the market rises during the build period, and in well-chosen growth corridors it often does, you may have equity before you’ve even received the keys. This is the moment the off-the-plan story gets exciting, and it genuinely does happen.
It also genuinely goes the other way. If the market softens during the build, your locked-in price may be above what the property is worth at settlement. Which is why location fundamentals matter enormously (more on that shortly).
Stamp duty savings
For house and land packages, stamp duty in most states is calculated on the land value only, not the total build cost. On a $700,000 package where the land is worth $280,000, the saving can be meaningful. For strata off-the-plan, many states offer concessional or deferred stamp duty for new builds. Check your state’s current scheme and the specific thresholds and eligibility rules change regularly.
Depreciation benefits
New builds offer maximum depreciation deductions. Everything in the property from the structure itself, the fixtures, the appliances, is new and eligible for depreciation from day one. On an established property, many of those assets are already partially or fully depreciated. A quality depreciation schedule on a new property can significantly reduce your taxable income in the early years.
Negative gearing in the post-Budget environment
Under the proposed 2026 Budget rules, qualifying new builds retain negative gearing for new purchases beyond 1 July 2027. Established investment properties lose it. This is a material shift in the relative attractiveness of new builds for investors who rely on negative gearing to make the numbers work. It doesn’t make off-the-plan automatically the right answer, but it changes the equation in a way that can’t be ignored.
The Risks: What the Brochure Won’t Tell You
This is the part I need you to sit with. Not to scare you but because understanding the risks clearly is what separates a good off-the-plan decision from a painful one.
Build quality you can’t inspect
When you buy an established property, you can inspect it. You can bring a building and pest inspector. You can look at the walls, the waterproofing, the roof, the plumbing. You can ask questions and get answers grounded in something physical.
When you buy off-the-plan, you’re buying a set of promises; a contract, a schedule of finishes, a floor plan, and a track record. The track record is the only thing you can actually verify before you sign. And yet it’s the thing most buyers spend the least time on.
Build quality issues in Australian residential construction are not rare. Not catastrophic in most cases, but not rare. Defects, particularly in waterproofing and cladding, have generated years of litigation and significant repair costs for owners in certain developments. Some are resolved quickly. Some aren’t. And your ability to get recourse depends heavily on whether the developer is still solvent and the builder still operating when you find the problem.
Developer and builder insolvency is a real risk in 2024–2026
The Australian construction sector has seen a significant number of insolvencies since 2022 driven by fixed-price contracts signed during a period of rapid cost escalation. If a developer or builder becomes insolvent before your project is complete, the outcome ranges from significant delays to total project collapse. QBCC insurance in Queensland and equivalent schemes in other states provide some protection, but the process is slow and coverage has limits. Research the developer’s financial position and track record and NOT just their marketing material.
Valuation shortfalls at settlement
Here’s one that catches a lot of buyers off guard.
At settlement, your lender will commission an independent valuation. And that valuation is based on current market conditions. Not on what you agreed to pay, not on what the developer told you it would be worth. If the market has softened since you signed the contract, the valuation may come in below your purchase price.
When that happens, your lender will advance you only what the property has been valued at. The gap (between the valuation and your purchase price) is yours to fund. That might be $20,000. It might be $80,000. If you don’t have it, you can’t settle. And if you can’t settle, you may lose your deposit.
This is not a hypothetical scenario. It happened to a meaningful number of buyers during the 2017–2019 apartment market correction in Sydney and Melbourne. It can happen again.
Timeline blowouts
Construction timelines in Australia are optimistic by nature and subject to genuine disruption. Labour shortages, material supply chains, adverse weather, council delays, and financial difficulties all contribute to projects running over time.
What does a 12-month blowout mean for you? Your pre-approval may have expired. Your personal circumstances may have changed — income, employment, relationship status. Interest rates may be different. The rental market in that suburb may have shifted. You’ve been paying rent or carrying costs somewhere else while you waited.
The emotional cost is real too. People make life plans around settlement dates. When those dates move, repeatedly, it is genuinely destabilising.
Land registration delays
For house and land packages, there’s an additional step that’s often underestimated: land registration. Before your house can be built, the land parcel needs to be registered with the titles office, and that requires civil works (roads, drainage, utilities) to be completed first. These civil works are dependent on weather, council approvals, and infrastructure timelines that are largely outside the developer’s control. In some cases, registration delays of 6–12 months beyond the estimated date are not unusual. But this can also work for you too, it is about your strategy.
“The track record of the developer is the only thing you can actually verify before you sign. And yet it’s the thing most buyers spend the least time on.”
The 2026 Budget: What It Actually Changes
Let me be direct about this, because I think it’s the most important context for this decision in 2026.
The Budget has made new builds relatively more attractive for investors who want negative gearing. It has not made them safe. It has not eliminated the risks above. What it has done is shift the comparative tax treatment in a way that changes the cost-benefit analysis for many investors.
If you’re an investor who previously bought only established properties because you could see them, inspect them, and understand their history and you valued that certainty over the tax upside of new builds – the Budget has challenged that preference. Not overridden it. Challenged it.
The question worth asking yourself is not “should I do off-the-plan to keep my tax benefit?” The question is “can I make off-the-plan work safely enough that the tax benefit is worth the trade-off?”
For some investors, with the right developer, the right location, and the right due diligence the answer will be “yes”. For others, a well-selected established property with strong fundamentals will still be the better investment, even without negative gearing. The numbers need to be modelled, not assumed.
The Budget changes are proposed, not yet law.
These rules still need to pass parliament. They are likely to pass but until they do, treat them as probable, not certain. Plan for them, but don’t make irreversible decisions solely on the basis of an announcement.
If You’re Going to Do It — How to Do It Right
If you’ve weighed all of that and off-the-plan still makes sense for your situation, here’s what the due diligence actually looks like.
Research the developer — properly
Not their website. Their track record. How many projects have they completed? Have they been delivered on time and on specification? Are there defect complaints lodged with fair trading? Have any of their related entities been in administration? A developer with one completed project and a glossy website is a very different risk profile to one with ten projects and a clean record. Ask the hard questions. Look them up on ASIC. Google their name alongside the word “defect” and “delay” and see what comes up.
Get a solicitor who specialises in off-the-plan
Off-the-plan contracts are long, complex, and heavily weighted in favour of the developer. The sunset clause (the provision that allows either party to walk away if the project isn’t completed within a certain timeframe is particularly important). Who can trigger it? Under what conditions? What happens to your deposit? A good solicitor will identify the provisions you need to negotiate before you sign. This is not a job for a generalist.
The “schedule of finishes” (the list of what’s included) is a contractual document, but developers often retain the right to make substitutions of “similar quality.” Know exactly what that means in your contract before you sign. Floor plans can also change. Size can change within tolerances. Get advice on what substitution and variation rights the developer holds.
Make the numbers work without the best-case scenario
Model the investment on conservative assumptions. What if settlement is 12 months late? What if the valuation comes in 5% below your purchase price? What if vacancy in that suburb is 4% rather than 2% when you’retrying to lease it? If the investment only works if everything goes right, it’s not a good investment. The best investments still make sense when some things go wrong.
Understand the suburb, not just the development
Off-the-plan in the right location is a very different proposition to off-the-plan in a suburb where six other developments are completing at the same time. Understand the supply pipeline. How many new dwellings are being delivered in the next 12–24 months within 5km? What does that do to vacancy rates and rents? What are the population, employment, and infrastructure drivers for that area over the next ten years?
Is Off-the-Plan Right for You?
I’m not going to tell you to do it. And I’m not going to tell you to avoid it.
What I will say is this: off-the-plan is not a category of investment that is inherently good or bad. It’s a structure that can work brilliantly or go badly, depending almost entirely on the quality of the decision-making around it. The developer you choose, the location you choose, the contract terms you negotiate, and the financial resilience you bring to it, they become the variables.
What I would ask you to consider is whether you are making this decision because the fundamentals support it, or because a Budget announcement has made you feel like you have no other options. The latter is not a good reason to enter into a complex transaction. Pressure (even the pressure of tax policy) is not a substitute for clarity.
If you want to work through whether off-the-plan makes sense in your specific situation and what you can hold, what you can risk, what the numbers actually look like – that’s the conversation I have with clients every week. You don’t need to figure this out alone.
“Off-the-plan can work brilliantly or go badly depending almost entirely on the quality of the decision-making around it. Not the investment type. The decision.”
Related Reading
Negative Gearing and CGT Just Changed. Here’s What It Means For You.
Is Property Investment Still Worth It in 2026?
Conveyancer vs Solicitor — Which Do You Need and When?
Do You Need an Accountant When Buying Property?
Property Investing in Australia: 10 Real-World Rules for Smarter Decisions
Frequently Asked Questions
What is off-the-plan buying in Australia?
Buying off-the-plan means purchasing a property before it’s built — you sign a contract today, pay a deposit, and settle when construction is complete (typically 12–36 months later). The purchase price is locked in at signing, which can work in your favour if the market rises, and against you if it falls.
Why has the 2026 Federal Budget made off-the-plan more relevant?
The Budget announced that from 1 July 2027, negative gearing on new investment property purchases will apply only to qualifying new builds. Established properties will lose the ability to offset losses against other income. This makes qualifying new builds — including many off-the-plan purchases — relatively more attractive from a tax perspective.
What is a valuation shortfall and how do I protect against it?
A valuation shortfall happens when your lender’s independent valuation at settlement comes in below your purchase price. Your bank will only lend against the valuation — the gap is yours to fund. Protection strategies include: buying in locations with strong fundamentals where values are less likely to soften; negotiating a sunset clause that protects you; maintaining a financial buffer above your minimum deposit; and having a mortgage broker who has modelled the scenario with you before you sign.
How do I research a developer before buying off-the-plan?
Start with their completed project history — how many projects, delivered on what timeline, to what standard. Search ASIC for the corporate entity and any related companies. Search fair trading complaints registers in your state. Google the developer name plus “defect,” “delay,” and “administration.” Talk to owners in their previous developments if you can. A marketing website is not due diligence.
What is a sunset clause in an off-the-plan contract?
A sunset clause sets a deadline by which the project must be completed. If the deadline isn’t met, either party may have the right to terminate the contract and the deposit is returned. The risk is that some developers have used sunset clauses to rescind contracts in rising markets — allowing them to resell at higher prices. Ensure your solicitor checks how the sunset clause is worded and whether it adequately protects your position.
Is the stamp duty saving on house and land packages significant?
It can be. For a house and land package where stamp duty is calculated on the land value only, the saving versus buying an established property at the same total price can be tens of thousands of dollars depending on the state and price point. The exact calculation depends on your state’s stamp duty schedule and any applicable concessions. Check with your solicitor or state revenue office for your specific situation.
What happens if the developer goes insolvent before my property is built?
If the developer becomes insolvent, the outcome depends on the stage of the project, the financial position of the development company, and whether the builder is separately contracted. In Queensland, the QBCC home warranty scheme provides some protection. Other states have equivalent schemes. In the worst case, you may face significant delays and possible loss of your deposit above any protected amount. This risk is the primary reason developer due diligence is essential before you sign.
Should I buy off-the-plan just to keep negative gearing?
Tax treatment is one input into the investment decision but not the whole decision. An off-the-plan property in the wrong location, with a risky developer, on poor terms, is not a good investment even if it comes with negative gearing. A well-located established property with strong fundamentals may outperform it even without negative gearing. Run the full numbers like yield, capital growth assumptions, risk exposure, and tax treatment before deciding.
Sources & references
The following sources are relevant to the content covered in this article.
- Australian Taxation Office — Off-the-Plan Purchases and Stamp Duty: ato.gov.au
- Australian Treasury — 2026-27 Federal Budget, Negative Gearing Announcement: treasury.gov.au
- NSW Fair Trading — Off-the-Plan Purchases: fairtrading.nsw.gov.au
- Consumer Affairs Victoria — Buying Off the Plan: consumer.vic.gov.au
- QBCC — Queensland Home Warranty Scheme: qbcc.qld.gov.au
- ASIC — Developer and Builder Due Diligence: asic.gov.au
- CoreLogic — New Supply Pipeline Data: corelogic.com.au
- The Continuum Pathway — Negative Gearing and CGT Just Changed: thecontinuum.com.au/insights/federal-budget-2026-negative-gearing-cgt-changes
Disclaimer
This article contains general information only and does not constitute financial, legal or tax advice. Please speak to a licensed financial advisor, solicitor or mortgage broker about your specific circumstances. Aimee Templeman is a licensed real estate agent however approaches property through the lens of learning and empowerment. She has decades of experience coaching and advising everyday Australians and executive decision makers. Book a conversation with Aimee at Contact.