Everything you need to know about the First Home Owners Grant and the changes that are coming.
Given the increasing difficulty of acquiring that first property in Australia’s capital cities, the first home owners grant is proving extremely useful to willing first home buyers. The grant has already helped thousands of Australians step into their first property and get their foot in the door in this highly competitive market.
The legislation was introduced by the federal government back in 2000, but it’s actually the state governments that manage the grant, which means the rules change between states and territories.
For example, in New South Wales, first home buyers can receive $10,000 towards a new home up to the value of $750,000, while in Victoria the grant is also $10,000 but $20,000 in regional Victoria.
The first home buyers grant used to be available for both established and new properties but over time has been limited to new properties in most States and Territories ever since the Global Financial Crisis. While this rule has helped fuel the growth of the construction industry, it has meant that first homes are still a little out of reach for those looking at established homes for affordability and locality.
Because the grant does differ from state to state, it can sometimes be a little confusing knowing what you’re entitled to. At the moment, first home buyers in Queensland can receive a $20,000 grant towards a new build valued up to $750,000, but only until June 30, 2017.
There are also stamp duty concessions available for first time buyers with full exemption up to $500,000 and a sliding scale from between $500,000 and $549,000.
Throughout 2015-16, 2372 first home buyers made the Australian dream of owning their own home a reality with $35.6 million used for grants over the year. It’s certainly a decent top up for first home buyers that just need that extra leg up to buy their first home.
What changes are happening for first home buyers in Queensland?
But these rules are set to change for the new financial year with the grant dropping back to $15,000 – the same as it was just a year ago. However, this $15,000 grant will still only be applicable to new homes, not established properties.
Stamp duty concessions will also be available for First Home Buyers in Queensland in a bid to help first home buyers even more. Domain Group’s chief economist Andrew Wilson suggests that cutting stamp duty taxes is a far more effective policy than expanding grants, which in some markets have simply added to the price of homes.
Buy now or buy later?
It’s the question hot on everyone’s lips. Should I be purchasing a property now or should I wait to save up a heftier deposit, or better yet, wait to see if the rules change to offer the grant with established homes?
Treasurer Curtis Pitt has answered this question for many would-be first home buyers. He claims that anyone waiting to buy in the hope that this $20,000 offer will be extended to include established homes has been greatly misinformed.
Instead, first home buyers who wait for the rules to change may miss out on the $20,000 grant boost altogether. And it’s certainly a good incentive to snatch up your first home within this financial year.
How can I claim the $20,000 First Home Owners Grant?
Not everyone is entitled to this grant and it’s important that you meet the criteria in order to claim the $20,000 grant.
First of all, you need to purchase the property before July 1st 2017. Failure to do so will mean that you miss out on the extra $5,000 within the First Home Owners Grant. You also need to be building a new home, whether that’s buying off the plan, buying a block of land to build on, buying a home that has not previously been lived in or buying a home that has been substantially renovated.
The property’s value must also be under $750,000. So if you’re buying off the plan it is the purchase price that cannot exceed this amount, or if you are building your own home it’s the cost of the block of land plus the cost of construction.
You’ll need to live in the property for at least 6 months within the first year of purchase (or from the completion of the build) in order to hold onto your first home owners grant. If you do not fulfil this requirement you will have to pay back the grant and in some circumstances pay a penalty.
You will need to be and Australian resident or citizen. This grant is not for foreign buyers! And you must not have previously received that grant. That means you or your partner.
Buying your first home has never been easy! Take advantage of the resources on offer to you and snatch up the boosted grant while you still can. Property is only getting more and more expensive, so if you can afford to get in now, why not get something out of it?