Grants & Concessions for First Home Buyers

*Please note this is a general guide only and should not be used in place of obtaining our advice. Any references are relevant as of the date of posting.

Overview
If you are a first home buyer (FHB), you may be eligible for a one-off cash payment from the State Government, subject to meeting certain criteria. The First Home Owner Grant (FHOG) is a national scheme funded and administered by all States and Territories that was first introduced to offset the impact of the introduction of GST on home ownership. It is one of several concessions or grants that you may be eligible for.

Who is a first home buyer (FHB)?
A FHB is a person who has never previously purchased a house and used it as their principal place of residence.

Additionally, to be eligible for the FHOG an applicant must:

  • Be at least 18 years old at the date of settlement (although discretion exists on this requirement);
  • Have not previously received the FHOG;
  • Be an Australian Citizen or permanent resident or a New Zealand Citizen who holds a visa under s 32 of the Migration Act 1958 (Cth); and
  • Occupy the house for at least 12 months, commencing within 12 months of the date of settlement (however, an exemption for members of the Australian Defence Force exists).
    If your spouse has previously owned their own home (not just a residential premises) your eligibility for the FHOG may be affected.

The State Revenue Office provides this interactive tool to assist you in determining whether you may be eligible for the FHOG. Please ensure that you read all relevant disclaimers provided by the State Revenue Office in relation to this tool, as we cannot guarantee its accuracy.

How much may I receive (grant, concession or exemption) as a FHB?
FHOG
As of the date of this article, a grant of $10,000 is available for eligible FHBs purchasing a new dwelling. A new dwelling is defined as one which has not previously been sold as a residential premises. In regional Victoria, the grant may be as high as $20,000. If a FHB is seeking to purchase an existing home, they are not eligible for the FHOG (unless the existing home is being sold for the first time as a residence). They may, however, be eligible for a concession or exemption upon the duties which are payable.

FHB duty exemption or concession
Where a home sells for under $600,000 the eligible FHB may obtain a one-off duty exemption. Where the home sells between $600,001 and $750,000 the FHB may obtain a concession on the duty payable in respect of the property.

For a property which is not exempt from duty, the duty is calculated using the following equation:

Duty = ((A – 600,000)/150,000) x B

Where A is the dutiable value of the property and B is the ordinary duty payable which is calculated by:

B = $2,870 + 0.06 x (A – 130,000)

The duty concession can be significant. For example, on a house worth $599,000 the exemption is worth approximately $31,000. The concession given hereafter is similarly valuable.

What is the application process for the FHOG?
The applicant must gather the required documentation, including proof-of-identity documents and evidence of each applicant’s current residential address. This is duplicated for the applicant’s spouse. Once the relevant documentation is gathered, the appropriate form must be completed and submitted.

How is the decision made?
Following submission, the Commissioner must, if satisfied the applicants are eligible, authorise the payment of the FHOG to the applicant. The Commissioner may, at their discretion, review decisions and subsequently vary or reverse decisions. This must be done within five years of the original decision. Like many other decisions, an applicant may object and seek internal review by the Commissioner; this must be in writing and within 60 days of the decision (however, if the objection is lodged out of time and the Commissioner is satisfied that the applicant has a reasonable excuse for failing to meet the 60 day deadline, the Commissioner may extend the time for lodging the objection). Further, if the applicant remains unsatisfied with the decision, they may appeal the decision to the Tribunal (VCAT) which will review the matter and vary or confirm the original decision of the Commissioner.

Example:
Jane is 22 years old and has decided to buy herself a home. Her partner, Jim, is 25 and owns two investment properties; he has never lived in either house. They are seeking to purchase an established house together, valued at $620,000. Here, as Jim owns property but has never resided in the property, Jane will be eligible for the FHOG. As the home is established and worth more than $600,000 and less than $750,000 the grant will take the form of a concession from stamp duty – Jane’s concession will be $27,900. The duty payable to the State Revenue Office will be approximately: $4,302.

If you are interested in purchasing a property, we can help you assess whether you are eligible for the FHOG or any other applicable concessions or grants, depending on your circumstances.

Please contact our office on 03 9645 9500, or email our head conveyancer danielle.murphy@mertonlawyers.com.au if you wish to make an enquiry.



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