On 1 January 2016 the current First Home Owners Grant (New Homes) Scheme (‘the grant’) of $15,000 will reduce to $10,000. The reduction in the grant is one further step in a general pattern of diminishing government incentives for first home buyers.
Applicants will likely be eligible for the grant if:
- they are a natural person over 18 years of age;
- they have not previously owned a residential property jointly, separately or with some other person in any state or territory of Australia, and occupied that property for a continuous period of six months;
- the property being purchased is:
- a home that has not previously been occupied or sold as a residence;
- a vacant block of land on which the applicant builds a new home; or
- a home that has been unoccupied since it has been substantially renovated.
- the value of the property does not exceed $750,000;
- neither the applicant nor their partner have previously received the grant;
- they agree to live in the property for a continuous period of six months, commencing, for new homes, within 12 months from the date they are registered on the title, or, if building a home, the construction completion date;
- one applicant is an Australian citizen.
In order to be eligible for the full grant of $15,000 a first home buyer must exchange contracts for the purchase of the property on or before 31 December 2015.
In addition to the grant payment of $15,000, a purchaser of a new home or vacant land on which it is declared a new home will be built may also be eligible for stamp duty exemptions under the First Home _(New Homes) Scheme (‘the exemption’).
The joint effect of the grant and the exemption can be substantial. Subject to the eligibility requirements, a first home buyer that purchases a new home for, say, $300,000 could receive the grant of $15,000 and avoid the prescribed stamp duty of about $9,000 on the purchase price, equating to total benefits of about $24,000.
In circumstances where a 10 per cent, or $30,000 deposit is usual, the benefit gained from the first home incentives makes up about 80 per cent of the deposit.
So, if you’re a first home buyer and after a new home, it makes sense to get in before 1 January 2016. For more information on buying a home, call Everingham Solomons because Helping You is Our Business.
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