What is a First Home Owners Grant
The First Home Owners Grant is a one off tax free payment made by the government to eligible first home buyers throughout Australia. It was introduced on July 1, 2000 to compensate first home buyer for the extra financial burden placed on them following the introduction of the Goods and Services Tax (GST) at the same time. It has since been a most popular housing assistance scheme that has been widely accepted throughout Australia as well as being a useful economic tool the government used to help the housing industry survive the Global Financial Crisis (GFC).
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The grant, although funded by the Australian Government, is administered by the various state and territory governments through their relevant State or Territory Revenue Offices. As a result there can be some slight variations between the jurisdictions such as the Western Australian government’s decision to allow a valuation cap of $1,000,000 for first home buyers buying their first property north of the 26th parallel in that state, whereas in other areas in Western Australia, as for the rest of the nation generally, the valuation cap is set at $750,000. Another major variation also occurs in New South Wales where members of the armed forces buying property in that state have been made exempt from having to comply with the requirement that you must live in the residence for at least six months of the first 12 months following settlement, or in the case of first home buyers building their first home, from its completion date.
Eligibility
The different state and territory governments also supplement the First Home Owner Grant with incentives of their own. Some offer grants in their own right and others either waive, or give generous concessions, off their stamp duty requirements. Some give both but they all use the same eligibility criteria as that required by the First Home Owner Grant. The main requirements being:
• You must be either an Australian citizen or permanent resident who has resided in Australia for at least six months.
• You must be at least 18 years old.
• You can not have applied for the grant on any other occasion.
• You must be what is known as a ‘natural’ person. This means that you can not be a company, nor a trust, but the commissioner can allow certain trusts to apply if they have been specifically set up to care for a disabled person as the beneficiary.
• Neither you, nor your spouse or domestic partner of any gender, can have owned any other property elsewhere in Australia previously. This also applies to your spouse or domestic partner when they are not party to this particular property. If you are buying the property in conjunction with any other person or persons none of them, including yourself, can have owned property anywhere in Australia before.
• The home you are buying must be a legal building that complies with all Australian government building regulations pertaining to the locality where the property is located. This means it has to be either a free standing house, unit, flat, apartment, town house and even in some jurisdictions a mobile home as long as it is fixed to land owned by the applicant.
When to apply
It is best to make application for the First Home Owner Grant at the same time you apply for your home loan as many lenders are authorised agents to receive such documents. The grant application is processed faster if handled in this way than if your handed it directly to the relevant state or territory Revenue Office. In fact it is normally ready by the time of settlement, or in the case of you building, at the time your lender is due to make the first scheduled payment on the construction loan. If you can’t make this time frame however you will still have 12 months from settlement or the finish of construction to lodge the application. Even then the commissioner can agree to accept later applications if the circumstances allow.
Uses the grant money can be put to
Once granted the $7,000 lump sum, one off, tax free payment can be spent how you wish. It is not tied to any aspect of the home or home loan but it can be very handy in paying off the associated costs connected with getting the loan, such as an establishment fee, valuation fees, building and pest inspection costs, conveyancing and legal fees etc. Some first home buyers like to put the money into the loan itself. In this way it can give you more equity and help lower interest rates, although most lenders seem to not allow the grant money to be used as part of the deposit. They like to see the deposit come from actual savings that indicate a certain level of financial discipline over time.
Related posts:
- First Home Owners Grant (ACT)
- How to apply for first home owners grant
- Can I Apply for the First Home Owners Grant if I Have Previously Owned a Property Which Was Then Sold?
- First Home Owners Grant (WA)
- First Home Owners Grant FAQ
- How to Apply for the First Home Owners Grant in South Australia (SA)
- Federal Government First Home Owners Grant
- Eligibility for first home buyers grant
- First Home Owners Grant FAQ NSW
- 10 Essential Facts About The First Home Owner Grant
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