Building a home, or buying off the plan

On a property the plan buys, Bought as, under More options, is Already built unless you change it, Land and a building contract, or Off the plan. Each payment shows on the cash path in the month it falls in (see Reading the chart), and the panel beside the fields shows what leaves the bank at settlement (see Buying a property).

Land and a building contract

The price is the land and the build together. Type the Land price, and the rest is the Build price (the contract). The build starts when the land settles unless Build starts says otherwise, and Build takes 12 months unless you change it. Stamp duty is on the land alone, when it settles; fees and mortgage insurance are estimated on the land and build together.

The build is paid in stages. Under Advanced, Stages is The usual progress payments: 5% when it starts, then 10%, 15%, 35% and 25% through the build, and 10% at completion, the most a builder may ask at each stage under Victoria’s Domestic Building Contracts Act. Or Evenly, an equal part at the end of each month. Your own money goes first, to the land and its costs and then the stages; a loan that starts with the land pays the rest, drawn as each stage falls due, interest only until it is finished, then as the loan is set. When the plan moves on to a new year with the build under way, it carries on the same way: what is left of your own money for the stages, then the loan. Land you already own, with its loan linked, draws all its stages on that loan.

While it is built

Until it is finished it is held at the land and the stages paid so far, and earns, grows and claims nothing. Rent, growth and depreciation start the month it is finished, with the build price, less any fittings you type, as the building cost unless you type one (see Depreciation on a rental). Until then land tax is on the land alone, and neither it nor the interest on the loan’s share for the land is deducted from a rental’s income; the interest on what the stages draw is. Rent you pay while it is built can end that month, on its Ends. A sale dated before it is finished is not made, and the year shows A sale not made.

When the plan moves on to a new year with the build under way, the property is one you already own. Its Used as notes its land, its contract and the month it is finished; the build’s fields, its Value and its Owned date aren’t asked again until the plan has moved past then, since the stages already paid are worked out from them. Its Value when finished is still asked. Its cost base adds the stages paid so far to the land’s.

Value when finished

A valuation when it is finished can come in higher or lower than what it cost. A figure you have goes in Value when finished, under More options, on the same basis as the price. From the month it is finished the value is that figure, and it grows from there; blank, it is what it cost. Nothing is paid or received: the stages, the loan and your cost for tax stay the same, so a sale above or below that cost is treated as any growth is: on an investment, a gain is taxed and a loss is a capital loss; on your home, neither. The year it is finished shows the step as valued when finished.

From then the value counts as any property’s does: in your net position, in land tax and in the equity a later purchase can draw on. A lender uses its own valuation and its own tests, and a lower valuation can mean a smaller loan; typing a smaller loan shows what that does.

Off the plan

Off the plan asks when Contracts exchanged and the Deposit at exchange, 10% unless you change it. The deposit is paid then, or is already paid when that was before the plan; settlement, in the month it is bought, pays the rest with the duty and costs, and the loan starts then. Until settlement it earns, costs and grows nothing.

A build and an off-the-plan purchase are both new dwellings under the changes from 1 July 2027. Ask Runway can add a build from its land and build prices; its months, stages and value when finished, and an off-the-plan purchase, are set here.

What it leaves out

A build runs to time and to price: no overrun or delay. Until it’s finished it’s valued at what has been paid, and a valuation is one figure, applied the month it is finished; a lender’s response to it isn’t modelled. Once the plan has moved past completion, a later valuation can be typed as its Value; the cost base stays what was paid. The stages are one of the two patterns, never typed, and rent starts the month it is finished, with no empty months. A deposit bond isn’t modelled (the deposit is cash), nor are off-the-plan stamp duty concessions.