Let’s Look at the First Home Owners Grant

March 10, 2018
Young couple moving into home playing with box

Let’s Look at the First Home Owners Grant

Buying a property as a first home buyer can be an intimidating and difficult process. However, you may be able to access certain concessions that assist you with the financial aspect of getting your foot on the property ladder, the main one being the First Home Owner Grant (FHOG).

It’s important to ensure you have a good understanding of the FHOG as there have been some relatively recent changes and it applies to first home buyers differently depending on their circumstances. Below, we provide a thorough guide to the FHOG in Victoria and how it might help you purchase a home.

Are You Eligible for the FHOG in Victoria?

To be eligible for the FHOG, you must be at least 18 years old at settlement or completion of construction. You (or at least one applicant if applying with a spouse or partner) must also be an Australian citizen or a permanent resident.

Each state handles the FHOG in different ways. In Victoria, the state government offers two options:

  1. A payment of $10,000 to eligible first home buyers who build or buy their first home valued up to $750,000.
  2. An increase payment of $20,000 to eligible first home buyers who build or buy their first home in regional Victoria, valued up to $750,000.

You (or at least one applicant) must occupy the new home for at least 12 months, commencing within 12 months of settlement or completion of construction. Australian Defence Force personnel are exempt from this requirement however, as they may be required to serve overseas.

What is Classified as a New Home?

According to the State Revenue Office of Victoria, a new home includes:

  • Newly built homes
  • A land and building package
  • Off plan properties
  • Vacant land where a new home will be built

Established homes are no longer eligible to receive the FHOG. However, if you are purchasing an established property as a first home buyer and you meet the eligibility criteria for the FHOG, you may be able to get a first home buyer stamp duty exemption or concession (more on that later).

Hidden Costs When Buying Your First Home in Victoria

Even though you’ll be receiving a grant of $10,000 or $20,000 depending on your circumstances, it’s important to remember that there will also be a variety of other fees you’ll have to pay. These may include:

  • Legal/conveyancing fees, ranging anywhere between $500 and $3,000 depending on the complexity of the contracts.
  • Lenders mortgage insurance, if you are borrowing more than 80 per cent of the property’s asking price.
  • Independent home valuation (if you get one), costing around $300 to $500
  • A house inspection and strata report, cost between $500 to $600
  • Council rates and strata fees from settlement, ranging from $500 to $800.
  • Stamp duty, which will vary in cost depending on the property value, what it’s being used for and whether you’re eligible for concessions or exemptions.

In Victoria, homes are exempt from land tax unless they are being used as a holiday home or investment property.

Exemptions and Concessions

As a first home buyer, you may be eligible for and receive one or more of one of the following concessions, exemptions or reductions depending on your circumstances:

  • Stamp duty exemption or concession – Exemptions for homes up to $600,000 and concessions for homes with a dutiable value from $600,001 to $750,000.
  • First-home buyer reduction – a one-off duty reduction of up to 50 per cent for a PPR valued up to $600,000 if you entered into your contract before 1 July 2017.
  • Principal place of residence (PPR) concession – a duty concession for when a property you buy, valued up to $550,000, is intended as your primary home.
  • First-home owner with family exemption/concession – a one-off duty exemption or concession for properties valued at $200,000 or less.
  • Off-the-plan concession – a duty concession for an off-the-plan property, either as a land and building package, or as a refurbished lot.
  • Pensioner concession – a one-off duty exemption or concession for a new or established home valued up to $750,000.
  • Young farmers exemption or concession – a one-off duty exemption/concession for young farmers buying their first farmland property.

For more detailed information, look at the State Revenue Office of Victoria’s website or speak to an expert in Victorian property law.

Need Assistance With Your First Home Purchase?

If you need assistance with property conveyancing in Melbourne or property law advice in Victoria, talk to the experienced team at Just Conveyancing. Contact us online or call us on (03) 8580 2276 today.

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