Buying your first home is one of the biggest investments you will ever make. There are dozens of decisions you need to make.
The Australian government has a grant, that you may be eligible for, which can make the process a little easier. It is called the first homeowner’s grant. You may have heard of it. But who is eligible and when can you use it?
The First Home Owner Grant (FHOG) scheme was introduced on 1 July 2000 to offset the effect of the GST on home ownership. It is a national scheme funded by the states and territories and administered under their own legislation. Under the scheme, a one-off grant is payable to first home owners that satisfy all the eligibility criteria.
The eligibility criteria for a first homeowner grant in Australia is as follows:
- The applicant must be buying their first home or building their first home
- Each applicant must be applying as a person and not a company or trust
- At least one of the applicants should be a Permanent Resident (New Zealand citizens get a PR automatically) or Australian citizen
- Each applicant must at least be 18 years old
- At least one of the applicants must use the property as their primary place of residence for 6 continuous months within 12 months of the settlement of the purchase or construction of the home
- All applicants and their spouses or partners should not have owned a residential property in Australia before 1 July 2000
- All applicants and their spouses or partners should not have owned a residential property in Australia after 1 July 2000 and occupied it for 6 continuous months
- Each applicant must have entered the purchase contract to buy the home or signed the construction contract after 1 July 2000
- The total value of the home is not more than the grant amount
Some other common questions around the FHOG are listed below –
What happens if I move out of my home in the first 12 months?
If you have lived in your home for a continuous period of six months, you may keep the grant, but if you move out before this time, you need to repay the grant.
What sort of home qualifies me for the grant? Depending on the state or territory, an eligible home may be a new or established Australian house, home unit, flat, or other types of self-contained fixed dwelling that meets local planning standards. The specific rules vary by state.
I inherited a property. Can I claim the First Home Owner Grant for that?
No. You must be a buyer or builder of the property.
I am buying an existing home. Does that qualify me for the grant or does it have to be a new home? This depends on the state, with many now limiting the grant to purchasers of new or substantially renovated homes.
You can apply for the grant in two ways: either by lodging the application yourself through your state authority or asking your home loan provider to lodge an application for you. The grant is usually paid to your lender at the time of settlement and applied directly to your home loan. If you are building a house, the grant will be approved when your first loan repayment is due.
Also note that each state has its own rules in regards to the FHOG, so it is important to look out research the specifics for your state of residence. The grant amount varies between states. When you apply for the grant, you can also enjoy additional benefits depending on the rules of your state. Some states can waive or give discounts on stamp duty up to some property price limits. And if you buy or build a house in regional areas, you may be eligible for a larger grant.
Yes, buying your first home is hard, and yes, saving for your first home deposit is a monumental task. But we are lucky to have a government that helps us take the first leap.
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