Our mortgage brokers discuss home loans with a lot of prospective first home buyers in the Perth area. We think that the current combination of a slowly-rising home market and record low interest rates are providing great opportunities for entry into the market by first home buyers. We may go so far as to say that every month you delay can cost you thousands of dollars because home prices won’t stand still forever and interest rates won’t be low forever.
First Home Owner Grant (FHOG)
The First Home Owner Grant (FHOG) is a WA Government program to help first home buyers defray a portion of the costs of market entry. In WA, it is also designed to stimulate the economy by “stacking the deck” in favour of those who build new homes. Here’s how it works.
If you are a first home buyer, you are eligible for a grant of $10,000 if you purchase or build a new home. The FHOG only applies to dwellings. It doesn’t apply to vacant land, holiday houses, business premises or renovations to an existing home.
If you purchase a home that has just been renovated, you can apply for the FHOG. However, there are other restrictions that apply, dependent upon too many factors to try and cover here.
How and When to Apply
To apply for the FHOG, you can visit their website: https://www.finance.wa.gov.au/cms/State_Revenue/FHOG/First_Home_Owner_Grant.aspx . You can also obtain the forms from an approved agent.
However, you can’t submit the application until you have signed a contract to build or purchase a home. The contract has to be appropriately witnessed and signed and dated by all parties. An owner-builder can apply as soon as the foundation has been laid.
Most people apply as soon as possible so they get their money as soon as possible. However, they have set a time limit for application of one year after the transaction is completed. The application can be lodged through the state department of revenue or an approved agent.
How to Know if You are Eligible for the FHOG
Here are the criteria for eligibility:
You must be a person: not a trust or a company.
You must be at least 18 years old at the commencement date of the purchase.
At least one applicant must be a permanent Australian resident or an Australian citizen when submitting the application.
No applicant or their spouse can have received a previous FHOG.
No applicant can have owned any residential property in Australia prior to 1 July 2000.
No applicant or their spouse can have owned any residential property in Australia on or after 1 July 2000 if they lived on that property for six or more continuous months that started on or after 1 July 2004.
Each person on the application must occupy the home being built or purchased as their principal residence for at least six continuous months, beginning within twelve months of the day the transaction was completed.
Each person on the application must have entered the eligible transaction on or before 1 July 2000.
Since 2010, there has been a cap on the amount of a home eligible for a FHOG. In the Perth area, it is $750,000.
First Home Owner Rate (FHOR) of Duty
First home buyers are also eligible for a First Home Owner Rate (FHOR) of Duty. This can represent a huge discount and sometimes full exemption from Stamp Duty Tax. However, some restrictions apply that can be difficult in the Perth area due to higher property prices than in Regional WA.
If the value of an established home is less than $430,000, you owe no duty. If it is between $430,000 and $530,000, you pay $19.19 on every $100 or every part of $100 that is more than $430,000.
On vacant land, the deal is even better. If it is worth $300,000 or less, you don’t pay any duty. If it is between $300,000 and $400,000, you pay $13.01 for every $100 over $300,000. If your land is worth more than $400,000, you pay full duty. There is no duty on the home you build, which represents another huge savings.
To learn more, call us today: (08) 9453 8888.