If you’re currently thinking about purchasing property, you may have come across some of the current government grants and incentives that are available. These grants are designed to reduce the cost of purchasing a property. From first-time buyers to downsizers, there’s help available to you when it comes to the purchase of your next home, and understanding these grants will make it easier to find your dream home sooner. This article is designed to help you understand the various types of assistance governments offer to those looking to buy their first or next residence.
New Home Guarantee
The New Home Guarantee supports eligible first home buyers with as little as 5% deposit. This scheme allows the lender/s to avoid paying any LMI (lenders mortgage insurance) with a 5% deposit.
If your home loan is covered by this scheme, you can also access other government programs such as the First Home Super Saver Scheme, Home Builder Grant or First Home Owners Grant.
Eligible New Home Guarantee properties include:
- Newly-constructed dwellings
- Off-the-plan dwellings
- House and land packages
- Land and a separate contract to build a new home.
If you are building a new home:
- You must enter into an eligible building contract within 90 days of being pre-approved; and
- You must start building within 12 months of entering into the eligible building contract and finish building within 24 months of starting. For any reservations made prior to the 1st of July 2021, the building commencement date must be within 6 months.
Eligible first home buyers looking to build or purchase a new home, have the ability to apply for a loan to purchase an eligible property, up until 30 June 2022.
Family Home Guarantee
This grant is designed so that single parents that have dependent children, have the ability to buy a home with a 2% deposit. The government will cover the cost of the LMI (lenders mortgage insurance) that is normally required by purchasers, who do not have a 20% deposit.
To be eligible for this scheme, applicants must have:
- A dependent child
- Not currently own a property (but can have previously been a homeowner)
- Have an income <$125,000
- Be an Australian citizen over the age of 18.
For a property to be eligible it must be a residential property.
Eligible residential properties include:
- an existing house, townhouse or apartment
- a house and land package
- land and a separate contract to build a home
- an off-the-plan apartment or townhouse
First Home Super Save Scheme
First Home Super Saver Scheme allows first home buyers to withdraw their voluntary superannuation contributions to put towards their homes. The withdrawal limit has increased from $30,000 to $50,000. This allows people to put their super towards a property purchase, easing the burden of saving for a large deposit.
You can start making super contributions from any age. However, you must be 18 years old or older to request the release of funds.
To be eligible for this grant you can not have ever owned property in Australia. This includes an investment property, vacant land, commercial property, a lease of land in Australia, or a company title interest in land in Australia
First Home Owners Grant
If you are buying or building a new home that is valued at up to $750,000, you may be eligible for a First Home Owner Grant (FHOG) of $10,000.
To be eligible for this Grant:
- The home must not have been previously sold or occupied, it must be a new build
- The property must be purchased with the intent of being your home. Therefore, it cannot be used as an investment property or a holiday house.
To see if you’re eligible for this grant, you can use this Government Tool
If you’re a first homeowner, you may be eligible for a total exemption or a concession on stamp duty if:
- Your home’s dutiable value does not exceed $600,000 (for exemption)
- Your home’s dutiable value is from $600,001 to $750,000 (for concession)
- The property must not have been lived in or sold before
- Must be intending to occupy the property within 12 months of settlement and for at least 12 months (cannot be an investment property)
- Must be an Australian citizen or permanent resident, at least 18 years of age
- Contract entered into on or after 1st of July 2017
The Off-the-plan concession will allow you to save more than if you were buying an established or completed project. This concession enables purchasers to only pay duty on the amount of construction that has commenced. Please note that the further along a building’s construction is, the more duty you will have to pay. This varies significantly for different types of properties and is dependent on the stage of construction.
Let’s say you are eligible for the First Home Buyer Duty Exemption and you have bought an off-the-plan apartment for $790,000. Construction has not commenced yet. You are told that $450,000 of the contract price will be put towards construction. Your dutiable value is $340,000 ($790,000-$450,000). As your dutiable value is below the First Home Buyer Duty Exemption threshold ($600,000), you meet the requirements and thus will only pay duty on the $340,000.
Now let’s say you’re eligible for the PPR concession and have bought an off-the-plan apartment for $820,000. You have signed the contract before construction has commenced. You are told that $600,000 of the contract price is going towards construction. Your dutiable value is now $220,000 ($820,000-$600,000). As this is less than the PPR Concession threshold ($550,000), you meet the requirements and thus will only pay duty on the $220,000.
Principal Place of Residence (PPR)
Principal Place of Residence Duty concession can be used to receive a reduction in duty tax payable. This grant is available in Victoria for both new or established property. Purchasers must have the intention to occupy the property. There are, of course, eligibility criteria that must be met in order to obtain a concession.
- The dutible value must not exceed $550,000.
- You must show intention to move into the home within 12 months of settlement
- You must occupy the property for at least one year as your primary home.
However, please note that this concession cannot be obtained if you purchased your property at a significant discount or it was gifted to you. This benefit is more accessible than other grants on offer, as it is eligible to all buyers as long as the criteria are met.
Federal Government Downsizer Incentives
More and more older Australians are seeing the benefits of selling their family home in favor of a simple, low-maintenance lifestyle. To facilitate this, there are generous financial incentives for those who are ready to downsize. If you sign a contract to sell your home on or after 1 July 2018 and you meet the eligibility requirements, you may be able to make a contribution of up to $300,000 per person (if a couple) to your nominated super account.
For those considering getting into the property market, with new and extended grants available, this might be a perfect time. Depending on your eligibility, you could see huge savings thanks to the government’s continued support.
So what’re you waiting for? There has never been a better time than now to buy a new property and take advantage of the government grants available.
If you’re looking for an off-the-plan property that will be completed in 2021, we have two projects; Malvern East II and Burwood La Frank. Alternatively, we have two projects commencing this year, our Cornus Carnegie and Cornus Oakleigh developments.