Buying a first home is always going to be a challenging task. It will feel this way for a number of reasons.
First, you’ve got to have a deposit saved. Second, you have to go seek out a suitable home for your needs and budget (loan amount). Once this is done the real work of sorting through all the paperwork begins.
It is no surprise then many first home owners & buyers feel the process of getting their foot on the property ladder leaves them with more questions than answers. To help dispel some of the mystery surrounding the process, let’s look now at the top 5 questions FHOs have to surround the First Home Owner’s Grant (FHOG).
Is the FHOs Grant Eligibility the same in NSW as across all of Australia?
No. Across Australian states and territories, there are some significant differences when it comes to the FHOG. This means looking into the particulars of the details for the NSW FHOG is essential.
While other states or territories may ask for particular conditions to be met or followed, NSW’s FHOG is unique.
With the current scheme in place, an FHO in NSW stands to receive a grant of $10,000 towards the purchase of their first home, provided it’s one that is new, or recently been substantially renovated. Further, stamp duty concessions are available for any home between $550,000 and $650,000., No duty is charged for any home valued up to $550,000, and an excusal of $18,555 for any home up to $650,000. A house worth more than $650,000 shall not be eligible for stamp duty concession.
Who is defined as a FHOs exactly?
It sounds like being an FHO is straightforward at first, but a number of conditions surround the definition. In order to be an FHOs, you must actually live in your first home as your primary residence within 12 months of the payment or construction of your home or building. Once you have begun living in the home, you must then stay there for a minimum period of six continuous months occupancy. If more than one individual is buying the home, at least one of them must be an Australian citizen or permanent resident (PR).
Furthermore, you must be buying the home as an individual, and not as part of a company or trust. You must be at least 18 years of age, and your partner or co-purchaser must not have owned any home in Australia before July 1, 2000. Further to this, you must not have lived in a residential property which you owned from 1 July 2000.
While conditions are subject to change, at the time of writing if an individual satisfies all these above it can be expected they shall qualify for a first home owner’s grant in NSW.
Can I still apply if own property outside Australia or have inherited a property in Australia?
If you own property outside Australia it is possible you may still be eligible to claim a FHOG provided you satisfy the conditions for one otherwise. This can potentially be dependent upon the nature of your ownership and where you own the existing property – for while Lord Howe Island is offshore it is is an unincorporated territory of NSW, whereas ownership of a home in London, UK would not – so seeking out specific advice as it relates to whether your existing property may be required.
If you have inherited holding of a property in Australia you are not eligible to claim for a FHOG. If it is anticipated you shall inherit ownership of a property – but not have not yet inherited the property – you may still be eligible to make a claim for a FHOG.
How does the FHOG impact my (and my partner’s) income and taxation?
The FHOG is not means tested by earnings. This means whether you have a modest salary or one in the millions you will still qualify for a FHOG provided you meet the conditions above. Similarly, while it is important to consider how owning a property may impact your taxation obligations (and consulting with an accountant or financial professional is advisable), the FHOG itself is not subject to taxation.
While the FHOG does provide the opportunity for any FHOs to receive it when buying a first home, it is also available for use just once, and for just one home. This means once you and any partner(s) have purchased a home using a FHOG you shall then be ineligible to seek it in future even if you do not maintain a long-term interest in the property.
What factors are often overlooked with a FHOG?
Three factors are commonly overlooked by someone seeking a FHOG. First, if you are neither a PR or citizen you are eligible to buy a property in Australia (unless making an application via the Foreign Review Investment Board) but are unable to do so with access to the FHOG. Further, it is not possible to claim the FHOG if at a later time you do become a permanent resident.
Second, you can purchase a home in a caravan park or similar site using a FHOG but it must be a structure that is permanent (nailed down) and otherwise immovable. Any purchase of a residence that could be viewed as portable – such as a caravan, houseboat, or other structure – shall not be eligible for a FHOG. Thirdly, the value of any property eligible for a FHOG in NSW must not exceed $750,000.
Any FHOs buying a first home in a area with expensive property (such as the Sydney or Newcastle market) will need consider whether the benefit of a FHOG is not outweighed by the limitations placed upon their price range, if other factors such as savings and income offer the chance to look for a residence beyond $750,000.