Government Support And Incentives

It’s worthwhile checking if you’re eligible for any government support when you buy your first home.  At the moment there are three major incentives:

• The First Home Owner’s Grant
• The First Home Super Saver Scheme
• Stamp Duty Concessions

The amount and the eligibility criteria vary from state to state and depending on which political party is in power.  Other schemes may come up, so keep an eye on the Treasury or Revenue website for your area. You’ll find a list of the websites on the next page. I’ll give a brief outline of each of these three main incentives as they stand in May 2020. 

1. First Home Owner Grant (FHOG)

The FHOG is a one-off payment for eligible first home buyers. It’s a national scheme but funded by the state and territory governments so the grant amounts vary, as you can see from the table below. 

Eligibility criteria also differ between the states. In general, to apply you need to be a permanent resident or citizen of Australia aged over 18 and not have received the grant before.  You need to be purchasing the house to live in yourself for a period of time. There are other criteria as well so check your state or territory website to see if you’re eligible and how much you will receive.

In South Australia, at the time of writing, the residence must be new and valued at less than $575,000. 

The First Home Owner Grant isn’t means tested, which means the eligibility criteria isn’t based on financial considerations, such as your income. The grant is usually paid at the time of settlement to your lender and applied directly to your home loan. If you are building a home, the grant will be approved when your first loan repayment is due.

Here is a summary of current FHOG amount at the time of writing (July 2018).

2. Stamp Duty Concessions

State and Territory governments charge Stamp Duty on the purchase of property. It can be around 5% of the price of the property. Concessions and exemptions can apply for first home buyers depending on where you are buying. Check the Revenue Office or Treasury website for details on your state or territory.

State and Territory Websites

For further information on First Home Owner’s Grants and Stamp Duty Concessions

3.  First Home Super Saver Scheme (FHSS)

From 1 July 2017, you can use your superannuation fund to help you save money for your deposit for your first home. You make additional payments into your Super fund using salary sacrifice.  That means that you choose for a certain amount of your pay, up to $15,000 per year and overall up to a maximum of $30,000, to go directly into your Super fund.  The benefit of this is that the money in Super is taxed at lower rate, so you’ll be able to save faster. This scheme is the same for all parts of Australia, but not all Superannuation funds are part of FHSS so you need to check if your fund is part of the scheme.

To qualify for this scheme, you must be over 18, not have previously owned property before, not have used the FHSS before and live in the premises you are buying for at least 6 months.

When you take your money out of the Super Saver account, the Australia Taxation Office (ATO) will calculate the amount of tax you would normally have paid on it.  Then they will give a discount of either 17% or 30% on that amount.  You’ll need to include the final amount on your tax return.

You need to receive the money from your superannuation fund before you sign a contract to purchase or construct residential premises.

Once you have taken your savings out of the super fund, you have up to 12 months to sign a contract to purchase or construct a home.  If not, you can apply for an extension of time or repay all the money into your super fund.

Given the potential complexities related to personal circumstances (i.e. HELP Debt, impact on personal cash flow and other long-term goals), I strongly suggest that you seek both tax and financial planning advice relating to the FHSSS to see if it is suitable for you.

We’re here to help you

Dealing with banks can be a stressful experience but rest assured that our mortgage broker based in Glenelg (but our mortgage broker services the entire Adelaide Metropolitan area) can help you make the right decision about your mortgage. We will guide you at every stage of your loan process.

Contact us on 08 8376 0455 or drop into our office at 593 Anzac Highway, Glenelg SA 5045.

Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. Information in this article is correct as of the date of publication and is subject to change.