Stamp Duty Cuts and Changes to First Home Owner Grant Effective 1 July 2017
By Evelyn Marcou, Senior Associate, MST Lawyers
Changes to the First Home Owner Grant
From 1 July 2017, the First Home Owner Grant (FHOG) will double to $20,000 for those purchasing/building a new home in regional Victoria. This measure will also assist in stimulating the local economies in regional areas by providing additional employment and supporting the construction industry.
The FHOG will continue only to be available on purchases of up to $750,000.
To qualify for the FHOG, both the purchaser and the purchaser’s partner must be first-time home buyers. This is consistent with the definition detailed by the First Home Owner Grant Act 2000.
Additionally, the purchased property must be used as the purchaser(s)’s primary place of residence for a continuous 12 month period, commencing within 12 months of possession of the purchased property.
Changes to Stamp Duty
Along with increasing the FHOG, the government has also announced it will abolish stamp duty for first home buyers purchasing properties valued below $600,000.
From 1 July 2017, first home buyers will be exempt from paying stamp duty when for homes valued at less than $600,000. Furthermore, there will be concessions available on properties valued between $600,000 and $750,000. The exemption and concessions will be available for new and established home purchases and will apply to contracts signed after 1 July 2017.
By substantially reducing the upfront cost of purchasing a home, this initiative assists first home buyers trying to get into the housing market.
What are the criteria to qualify for an exemption or concession?
- The home must have a dutiable amount of less than $600,000 to receive a stamp duty exemption.
- A concession applies on a sliding scale for purchases with a dutiable amount between $600,000 and $750,000.
- The purchaser and the purchaser’s partner must both be first home buyers, consistent with the definition set out in the First Home Owner Grant Act 2000.
- The purchaser must be an Australian citizen or permanent resident (New Zealanders holding a special category visa are considered permanent residents if they are in Australia at the time of settlement).
- The purchased property must be used as the purchaser’s principal place of residence for a 12 month continuous period, commencing within 12 months of possession of the acquired property.
Changes to off the plan concession
The off the plan concession is being retargeted and will now only apply to buyers who occupy the property as their principal place of residence (PPR).
This change will apply to contracts entered into from 1 July 2017.
An estimated 25,000 first home buyers will benefit from these changes each year.