Whether real estate prices are on the rise or economic conditions are making it more difficult to save, buying your first property can be a hard personal finance nut to crack. That’s why it’s important to look at all your options as a first home buyer, to see how you can get a foot in the door earlier.
Figuring out if you’re ready for a home loan and finding the best one to suit your circumstances is always a clicher. Another helpful stepping stone toward property ownership is considering a home which fulfills the requirements of your state or territory's First Home Owners Grant (FHOG).
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What is the First Home Owners Grant?
On 1 July, 2000, the Howard Government introduced the Goods and Services Tax (GST) in Australia. To offset the roll on effect of this new tax on Aussies buying their first home, the First Home Owner Grant scheme was launched nationally.
Originally, the grant offered a one-off lump sum to first timers whether they were considering established properties or freshly minted homes. Today, most states require the property to be a ‘new’ or ‘substantially’ renovated home.
The FHOG differs according to the state or territory you live in, with each region having its own criteria that you (and your partner, if you live with them) will need to meet to be eligible. This includes being over the age of 18 and an Australian citizen or resident.
If you’re still saving for that first home deposit, our snapshot on the First Home Super Saver Scheme near the end of this guide is worth a read. But first, here’s a quick run through of the different FHOG and concession schemes across the country.
New South Wales - First Home Owner Grant (New Home):
First home buyers across New South Wales who purchase a new home valued at less than $600,000 can receive a $10,000 lump sum (if you’re buying land to build your home, the limit increases to $750,000). Keep in mind, you can only access this scheme if you move in within 12 months of purchasing or completing construction on the property, and live there continuously for at least six months.
In addition to the grant, NSW has also introduced the First Home Buyers Assistance Scheme. The primary benefit here is a full or partial exemption from paying transfer duty (previously known as stamp duty), which is a government tax on certain transactions.
First home buyers purchasing new and existing properties can be eligible for the full rebate if their home is valued at less than $650,000, or apply for a concessional rate if it’s between $650,000 and $800,000. Just buying vacant land before starting a build? You can ditch transfer duty if it’s valued at less than $350,000, or get a concession if it’s between $350,000 and $450,000.
Queensland - First Home Owners’ Grant:
Queensland offers a slightly more generous grant than its southern neighbours – a $15,000 one-off payment for new homes valued at less than $750,000. Again, you’ll need to move into the home within the first year and live in it for at least six months. And like NSW, Queensland also offers a first home transfer duty concession, which means you will pay no transfer duty on the land if you meet the eligibility requirements.
Australian Capital Territory - First Home Owner Grant:
Unfortunately, Canberrians planning to purchase or build their first home can no longer apply for the FHOG. However, anyone who completed their first home translation on or before June 30, 2019 has one year from that settlement date to access the $7,000 grant retrospectively. Conditions include living in the home for one year within 12 months of purchase or construction completion, and for the property value to be under $750,000.
For everyone else, the new incentive to buy your first home in the ACT is the Home Buyer Concession Scheme. This enables home buyers who haven’t owned property in the last two years to avoid paying stamp duty on new or existing homes, as well as vacant residential land.
There’s no limit on the price of the home, but there are household income thresholds. These consider your own and your partner’s income if you are purchasing the property together, and increase considering any dependent children you care for together. Again, you’ll need to live at the property for a year within 12 months of purchase or completing its construction.
South Australia - First Home Owner Grant:
If you call South Australia home and are buying or building a new property as your first home then you’ll receive a lump sum of up to $15,000. Your new digs will need a market value under $575,000.
Northern Territory - First Home Owner Grant:
New homeowners living in the top end of Australia can receive a grant of up to $10,000 if the home is brand new. The property can have any value and still qualify as grant-worthy if it was purchased in 2019 or later.
The NT also offers several other incentives designed to encourage first home buyers. These include:
- Household goods grants of up to $2,000 (if you’re eligible for the FHOG).
- Territory homeowner discount on stamp duty up to $18,601 (or $23,928.60 for first homeowners if you bought an established home valued at less than $650,000 prior to May 6, 2019).
- Home renovation grants up to $10,000 (only if you’ve bought an established property as your first home and will be employing professionals to do the construction).
Tasmania - First Home Owner Grant:
Tasmanian first home buyers can score a $20,000 lump sum if they’re buying or building a new between July 1, 2016 and June 30, 2022. Again, you’ll need to move in within the first 12 months of the home being built or purchased and live there for at least six months to qualify.
If you’re buying an established home as your first property move, you can get a 50% discount on property transfer duty. This is on the condition it’s valued under $400,000 and that you or your partner haven’t received a first home owner grant or duty concession in Australia before.
Victoria - First Home Owner Grant:
Are you purchasing a property in Victoria valued at less than $750,000? You could be eligible to receive a $10,000 lump sum and score a discount on your stamp duty. This could be a full duty waiver or a 50% reduction if the property is valued at less than $600,000 (if the value sits between $600,000 and $750,000 you’ll only be eligible for a concession).
Those who love the country air will be happy to hear, until June 30, 2021, the government will offer $20,000 to any first home buyer building a brand new home in regional Victoria valued up to $750,000.
Western Australia - First Home Owner Grant:
Western Australia offers a $10,000 grant to first home buyers who purchase or build a new property to live in. If an eligible contract was made between January 1 and June 30 2017, homeowners also qualify for a $5,000 ‘boost payment’.
If you’re thinking of stepping on the property ladder in WA, remember you’ll need to be an occupant for six months in the first year of the house being built to access the grant.
There’s also the Home Buyers Assistance Account available to first home owners purchasing an established property valued under $400,000. It provides a grant of up to $2,000 for some of the upfront expenses like pest and building inspection fees, conveyancer fees, and upfront home loan fees.
Still saving? Here’s a snapshot of the First Home Super Saver Scheme
This nationwide scheme introduced in 2017 aims to help young Aussies fast-track their savings by allowing them to make additional super contributions.
How it works: Aussies yet to take their first step on the property ladder can make additional super contributions of up to $15,000 annually by sacrificing a portion of their salary. Once they’ve contributed $30,000 via the scheme (which would take at least two years), they’re required to withdraw it from their super fund and add it to a first home deposit. Couples are included in the scheme, meaning they can save up individually and pool money together after withdrawing.
Tax benefits: Additional super contributions are taxed at a light 15%. While the ATO applies a tax rate to all funds withdrawn through the scheme as well, which is 30% below the marginal tax rate of the saver, first home buyers still wind up better off than if they’d simply used a high interest savings account for the same purpose.
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