The State Government has announced in the NSW State Budget that they will be making significant changes to the First Home Buyers stamp duty concessions and grant which will come into effect on 1 October 2012.
From 1 October 2012, the First Home Buyer Grant will be replaced by the First Home Owners Grant “New Home” Scheme and the grant will be increased from $7,000.00 to $15,000.00 for eligible first home buyers who are purchasing a newly constructed home and newly constructed strata unit, townhouse or villa and enter into the contract on or after 1 October 2012. This First Home Buyers Grant will be reduced to $10,000.00 for transactions entered into on or after 1 January 2014.
The current purchase price cap of $835,000.00 to gain the benefit of the First Home Owners Grant will be reduced to $650,000.00 for all transactions entered into on or after 1 October 2012. If the purchase price is more than $650,000.00, a first home new home buyer will not be eligible to gain any benefits under this new scheme.
All other buyers who are not first home buyers will be eligible to apply for the “New Home Grant” of $5,000.00 when they purchase an off the plan newly constructed home or newly constructed strata unit, townhouse or villa. The cap of $650,000.00 purchase price will also apply to these transactions.
The current $7,000.00 First Home Owners Grant available to first home buyers who purchase an already established property or vacant block of land will no longer be available for transactions entered into on or after 1 October 2012 and no new scheme will replace this previous grant for all other first home buyers of established properties.
In relation to stamp duty exemptions and/or concessions available to first home buyers, the new scheme available will be the First Home Owner Grant (New Homes) Scheme.
The First Home Owner Grant (New Homes) Scheme only applies to agreements entered into, and Transfers which occur, on or after 1 October 2012 for property located in New South Wales.
This means that first home buyers are only eligible to receive a concession or exemption from stamp duty if they purchase one of the following:
- A new home (that has not been previously occupied or sold as a place of residence);
- A substantially renovated home
There are also still limits on the dutiable value (purchase price) of the property in order to receive an exemption from stamp duty:
- The purchase price of the new home must not be more than $550,000.00 to receive the full exemption from stamp duty
First home purchasers are also eligible to receive a concession of stamp duty where:
- The purchase price of the new home is over $550,000.00 but no more than $650,000.00; or
The eligibility criteria that applies is the same as the First Home Owners Grant noted below.
A substantially renovated home is defined as:
- A new residential premises within the meaning of section 40-75(1)(b) of the New Tax System (Goods and Services Tax) Act 1999 of the Commonwealth; and
- That, as renovated, has not been previously occupied or sold as a place of residence
“Substantial renovations” of a building is defined under that legislation as “renovations in which all, or substantially all, of a building is removed or replaced. The renovations may, but need not, involve the removal or replacement of foundations, external walls, interior supporting walls, floors, roof or staircases.”
To be eligible to receive the First Home Owners Grant, all purchasers must meet the following criteria:
- Each applicant must be a natural person and not a company or trust;
- At least one application must be a permanent resident or Australia citizen;
- Each applicant must be at least 18 years of age;
- All applicants and/or their spouse/de facto must NOT have ever owned residential property, jointly, separately or with some other person, in any State or Territory of Australia prior to July 2000;
- All applicants and/or their spouse/de facto must NOT have ever owned a residential property jointly, separately or with some other person in any State or Territory of Australia and occupied that property for a continuous period of at least six (6) months;
- Each applicant has entered into a contract for the purchase of a home or signed a contract to build a home on or after 1 July 2000. In the case of owner-builder, laying of foundations commenced on or after 1 July 2000;
- The total value of the property does not exceed $650,000.00 (the cap amount from 1 October 2012 – this is reviewed annually);
- This must be the first time an applicant and/or their spouse/de facto will receive a grant under the First Home Owner Grant Act 2000 in any State or Territory (unless subsequently repaid);
- At least one applicant first home purchaser must occupy the home as their principal place of residence for a continuous period of six (6) months commencing within twelve (12) months from the completion of the agreement or construction of the new home.
NOTE: where an applicant is a member of the permanent forces of the Australian Defence Force and all applicants were enrolled on the NSW electoral roll, as at the commencement date of the eligible transaction, then all applicants are exempt from the residence requirement.
An eligible transaction which can also gain the benefit of the First Home Owner Grant (New Homes) of $15,000.00 will be a comprehensive home building contract made on or after 1 October 2012 by the owner of the land in New South Wales or a person who will on completion of the contract be the owner of land in New South Wales, to have a home built on it, or the building of a home in New South Wales by the owner builder if the building work commences on or after 1 October 2012.