Are Permanent Residents Eligible for First Home Owner Grant (FHOG)?

January 11, 2021 By: Nfinity Financials0 comments

Calling all first home buyers! The First Home Owner Grant, along with everything else that comes with buying a home, can be highly perplexing. If you feel like the walls are closing in, read on and you will find that with a few smart decisions, you will be on the right path to owning your dream home.

Did you know? Last year, Australia had 110,000 first home buyers. You can be one too, let’s dive in!

What is the First Home Owner Grant?

The First Home Owner Grant scheme is a lump sum of cash available to first home owners that meet particular eligibility criteria. It is a one-off payment to help first home buyers with the cost of buying a first home or vacant land to build their home on. Enabling them to enter the property market, the FHOG is funded by the Federal Government and managed by the State Government.

Introduced on 1^st July 2000, it is a national scheme to offset the effect of GST on first-home ownership. One grant is payable per new home, irrespective of the number of applicants. This grant does not have to be repaid, it is not taxable, but it does not end here.

Are you eligible?

Your eligibility for the FHOG will depend on what state or territory you want to buy in, how much you are going to spend, and if you own any property already. Each State and Territory has varied conditions, but the common threads across the board are:

• You must be a minimum of 18 years of age.
• You must be a Permanent Resident or Australian Citizen (or applying with someone who is).
• You must not have previously owned or co-owned a home in Australia.
• You and your spouse must not have received the Australian First Home Owner Grant in any state or territory of Australia before. If you received a grant that you later paid back together with any penalty, you may be able to re-apply for the grant.
• You must be a Natural Person (and not a Company or Trust).
• You must move into your new home as your principal place of residence within one year of the completed transaction, and live in the house for 6 months after purchase.
• The home you are buying or building should be brand new. (A ‘new’ home is a dwelling that has not been previously lived in or been sold as a home or, a building that has undergone substantial renovations.)

FHOG and Investment Properties

• The First Home Owner Grant is designed to assist people to secure a place of residence and not to aid people looking to invest in property. To get the grant, you need to buy the house and be the owner-occupier for at least six months. Failure to do this can lead you to be disqualified and curtail your attempts to receive the grant.
• If you have owned an interest in a residential property, that has been used solely for investment purposes, you may still be eligible for the First Home Owner Grant on a subsequent property after providing evidence covering the entire period of ownership.

How to apply for the FHOG?

There are two basic means to apply for the First Home Owner Grant. First and most common, through your lender. Lenders act as an approved agent on behalf of the state government and will process the payment of your grant with your loan funds. Second, you can apply directly to the State Government body (usually the Revenue Office) that handles the FHOG in your area.

Can the first home owner grant be used as a deposit?

You know it! Though it may not be enough to cover the entire deposit. However, the grant is paid at different times depending on how and when you apply and the kind of property you are buying or building. For this reason, it is advised against using the grant as a deposit. You do not need a deposit to apply for the grant itself.

Wrapping it up

Different states and territories across Australia offer various concessions for first home owners. The value of the grant changes according to the location and nature of the transaction. For instance, if you were buying a $630,078 house in Canberra, you would save $17,020.32 as first home buyers stamp duty!

Another example; the First Home Owner Grant NSW is valued at $20,000 for first-time buyers who build their first home, or purchase a new home up to $750,000. In many states, you may not be eligible for the First Home Owner Grant if you pay over a certain amount for your first home. Under the First Home Owner Grant NSW, the first home buyers stamp duty is valued at $0 for new or established first homes priced up to $650,000.

Make sure you read up on the particulars specified by each state before applying for your First Home Owner Grant. Happy buying!