First Home

First home buyer benefits and your spouse

First home buyer benefits

Some of the most common questions we receive in relation to obtaining first home buyer benefits are:

  • “If my spouse has purchased a property before, can I still claim first home benefits?”
  • “If my spouse purchases this property and I purchase a property later, can we both receive first home benefits?”

A spouse is a husband or wife and in relation to the term “de facto”, the Office of State Revenue uses the definition found here under Section 4AA of the Family Law Act 1975.  You should ensure you fall into either of these categories and if you are unsure, it is best to check before you enter into a Contract for Sale.

There are currently two benefits available to first home owners:

  • First Home New Home Scheme
  • First Home Owner Grant

First Home New Home Scheme

This scheme provides an exemption from stamp duty on properties up to the value of $550,000.00 and concessions on properties valued between $550,000.00-$650,000.00, you must meet the following eligibility criteria:

  • The Contract and Transfer must be for the purchase of the whole of the property.
  • All purchasers must be ‘eligible purchasers’.
    • An ‘eligible purchaser’ is defined as a natural person (i.e not a company or trust) at least 18 years of age who has not, and whose spouse/de facto has not:
      • At any time owned (either solely or with someone else) residential property in Australia other than property owned solely as a trustee or executor;
      • Previously received an exemption or concession under First Home New Home.
    • At least one eligible purchaser must occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months from the date of settlement.

First Home Owner Grant

To receive this grant you must meet the following eligibility criteria:

  • Each applicant is a natural person and not a company or trust.
  • Each applicant must be at least 18 years of age.
  • All applicants and/or their spouse/de facto have not owned a residential property, jointly, separately or with some other person, in any State or Territory of Australia before 1 July 2000.
  • All applicants and/or their spouse/de facto have not previously 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 6 months.
  • Each applicant has entered into a contract for the purchase of a new home or signed a contract to build a home on or after 1 January 2016. In the case of an owner builder, laying of the foundations commenced on or after 1 January 2016.
  • The total value of the property does not exceed the cap amount of $750,000.00.

This must be the first time an applicant and/or their spouse/de facto has received a first home owner grant and at least one applicant must occupy the home as their principal place of residence for a continuous period of six months, commencing within 12 months from the date of settlement.

Basically the short answer is that, as ALL applicants for each first home benefit must NOT have either jointly or solely owned a property previously, you will not be entitled to any first home benefit if your partner has previously owned a property.

The Office of State Revenue will assess each application on a case by case basis so if you feel that you have circumstances that don’t quite fit into any of the above criteria, we can submit an application on your behalf for individual assessment.

If you would like to speak to Carina about first home buyer benefits please contact us.

Article written as an update to the original entry posted in June 2016. Updated 30 September 2016.

5 tips to having funds ready on your settlement date

As a licensed Conveyancer I work with hundreds of properties (and people) with the exchange of ownership and transferring of funds. I have seen the pitfalls that can occur when purchasers are not diligent with their funds and do not ensure they have the correct amount in their account upon settlement. Your conveyancer can guide you, but in the end it is up to you to make sure you plan your finances correctly and have the correct funds in your account. To help you plan for that day here are my 5 tips to having funds ready on your settlement date, ensuring that you are not short of funds.

  1. Make sure that when you are borrowing money that your broker/banker includes the following in your loan amount or ensure that you have these funds available in your savings account on top of the purchase price:
    1. Stamp duty;
    2. Legal fees:
    3. Pest & Building fees;
    4. Strata Report fees;
    5. Title Insurance;
    6. Council/Water (approximately $2,000.00 + ); and
    7. Bank registration fees (approximately $500.00 +)
  2. Ask your broker/banker to sign an authority to debit shortfall account. This means that the bank will be able to debit from your nominated bank account (provided that it is with the same bank). This will save you from running around the day before settlement to try and get cheques for settlement.
  3. If you are a cash purchaser you can transfer approximate funds into your solicitors/conveyancers trust account well ahead of time and in stages. This will also save you time and money in running around the day before settlement to obtain cheques.
  4. Ensure that you do not overspend – set yourself a budget. When at an auction and the bidding price keeps going up and up, don’t make emotional decisions. Make sure you have a budget. Over spending could mean that you will have to contribute more of your own savings into the property or if you have lack of savings then borrowing off family or friends.
  5. If you are buying and selling and you are doing your budget, ensure that you add break costs for your discharging bank. If you have recently fixed your interest rate break costs can be quiet expensive and people forget about break costs. Calling your existing bank ahead of time and questioning the break costs could be very beneficial for you. They may even have a deal if you buy and sell and use them as the incoming bank.

If you would like advice on your property matter be sure to contact Coutts today.

First Home Owner Grant reduced

The First Home Owner Grant has been reduced to $10,000 as of 1 January 2016. The First Home Owner Grant (New Homes) scheme has been available for several years to assist eligible first home owners to purchase a new home or build their home by offering a grant.  The grant amount is determined by the date of the eligible transaction. This is the date of the contract to purchase a new home or contract to build a home.

  • For eligible transactions made on or after 1 January 2016, the grant amount is $10,000.
  • For eligible transactions made between 1 October 2012 and 31 December 2015, the grant amount is $15,000.

Here is a re-cap on the some of the terms and conditions associated with the grant:

  • New homes only – this means a home that has not previously been occupied, sold as a residence, renovated or built to replace demolished premises
  • Individuals only – not applicable to companies or trusts
  • If you OR your spouse OR your de facto has owned a property in Australia before, you are ineligible
  • At least one of the applicants must be a permanent resident or Australian Citizen
  • The total value of the property cannot exceed $750,000
  • At least one of the applicants must live in the home as their principal place of residence for a continuous period of six months commencing within twelve months of being the owner or if you are building, within 12 months of construction being completed

Other things to consider:

  • The grant is not available for the purchase of vacant land however where you have entered separate Land and Building Contracts:
    • Once you are making an application for a construction loan, you can apply for the grant through your financial institution and the grant is available to draw down from your first progress payment; or
    • You can apply for the grant directly from the Office of State Revenue once construction of your home has been completed provided the application is lodged within 12 months of completion of construction.

Please note: If you have not yet claimed the First Home Owner Grant but previously entered into a Contract for the purchase or construction of a new home and the date you entered that Contract is before 1 January 2016, you are still eligible for the $15,000.

This is a summary only. For more detailed information about First Home Buyer incentives please click through to this link http://www.osr.nsw.gov.au/first-home-buyers otherwise feel free to contact our office.

*This information is current as at February 2016

Joint tenants and tenants in common

What are Joint tenants and tenants in common ? If you and your partner have just thought about purchasing a property or are in the process of purchasing a property this is a question you will need to know the answer to. When you review your contract with your conveyancer you will be asked if you would like to purchase your property as Joint tenants or tenants in common. Most people are not aware of this until the appointment and do not realise the implications of their choice. We at Coutts endeavour to help you make the best choice for your current circumstances ensuring you have an easy transaction from beginning to end. As like every person, buying a property is quite complex and it can be a stressful period. One of the biggest decisions you both have to make is whether you wish to buy the property as Joint Tenants, Tenants in Common in equal shares or Tenants in Common in unequal shares. In this article I will describe to you the differences between joint tenants and tenants in common.

It is important to pick your shares earlier on in the purchasing transaction. During your Contract Review with your Solicitor or Licensed Conveyancer they will describe the difference. This article is going to give you a clear understanding on the differences and describe what these mean in "layman" terms so that any persons,  purchasing a property can make an easier decision prior to signing on the dotted line.

It is important to understand, discuss and decide on your shares prior to completion date, as if you make the wrong decision it will cost time and money to amend your shares later on down the track. It is not impossible to change your shareshowever, choosing the most suitable option early on will save you time and money and protect your best interests.

Joint Tenants

Usually, married couples are joint tenants. They own 50% of the property each. This means that if one party was to die the share he/she hadat the time of death can be transferred to the surviving partner. Therefore one person would have the whole 100% share.

One thing most people don't know about Joint Tenants is that you cannot "leave" your share to another person. For example if you and your de facto are joint tenants and you pass away you can't leave your share to your children regardless of the terms of your will. Your share will be left automatically to your de facto partner. It is up to them whether they choose to leave part of the property to your children when they pass away.

Tenants in Common in equal Shares

Tenants in Common in equal shares are normally made by couples who purchase who are not married. This means that yourself and your partner own 50% of the property each and if one of the partners were to pass away their 50% share will be left in accordance with the terms of their Will. This is becoming more common with second time around partnerships and couples with children to previous marriages.

It is very important that if you select to be a tenant in common that you prepare a Will immediately. In the Will you can set out how you wish for your 50% share to be divided. So, what does this mean for your partner who is left behind? It means that the people who are entitled to your share can force your surviving partner to sell the property to obtain your share of the property.

I have in previous years seen where this is an issue. An elderly person has been made to sell the property because step children wanted to sell the property to obtain their share of their parents half of the house. In this case we can create a life estate later on to protect the interest of an elderly person to ensure that they can live in the property until such time as they pass away or decide to move on.

Tenants in common in unequal shares

This is the same principal as above the only difference being on how many shares you own.

For example Brother and Sister are purchasing a property. Property is worth $1,000,000. The brother puts in $800,000 of his savings and sister puts in the remaining $200,000 into the property. As you can see the brother contributed 80% of the purchaseprice and the sister contributed 20% of the purchase price. Both wish to be tenants in common in unequal shares. Therefore, they will own the property as "brother as to 80/100 shares and Sister as to 20/100 shares".

As long as the shares add up to the value of 100th or 10th you can have as many people purchasing or as many shares as decided.

Given the rising prices of housing in all of Sydney many parents are choosing to either go guarantor on the children's property or even putting large sums of money towards their children's home. To protect their interest many parents are added onto the Contract and onto the deeds. An example where we can mix joint tenants and tenants in common is: husband and wife buy property, dad contributed a large some of money towards the purchase. Husband and wife own the property as joint tenants 50% and dad owns other half of the property, 50% as a tenant in common. This means that if the husband was to pass his share will automatically go to his wife. However, if the father passes away his 50% share would be distributed as per the terms of his will. If at any stage the husband and wife want to purchase back the fathers 50% then husband and wife would have to obtain a valuation from a registered property valuer and pay 50% stamp duty on the value of the property.

As you see from the examples whenbuying a property things can get quite complex. So ensure that you have discussed these matters with your partner prior to signing on the dotted line. If you would like any more information about your shares in a property please contact Coutts Solicitors & Conveyancers on 1300 268 887.

Title Insurance

What is title insurance?

Title insurance is a specialised insurance that provides protection to home owners against unknown and hidden risks that may exist at the time of purchasing a property.

Why do you need title insurance?

Even the best conveyancer or property lawyer cannot identify all potential risks to your property during the conveyancing process.  Title insurance provides that extra level of protection against the unknown.

So, what risks can title insurance cover?

  • Illegal or unapproved building works
  • Survey or boundary defects
  • Registration gap
  • Fraud, forgery and identity theft
  • Planning and title defects
  • Outstanding rates and taxes
  • Zoning issues
  • Breach of relevant laws
  • Forced removal or remediation of structures due to thirds party work

Top points for title insurance

  • It is a one-off premium
  • There is no excess on claims
  • No fault claims – no fault or negligence needs to be proved
  • No cap on cover apart from policy amounts

What is the cost to you?

The premium varies depending on the value of the property and the type of property you are purchasing, enquire with your conveyancer or property lawyer to find out more.

If you would like to know more about title insurance please contact Coutts on 1300 268 887.

What is a Sunset Clause?

There has been a lot of reports in the media lately regarding sunset clauses and changing the way they operate.  To best understand the need for reform of these clauses, its important to first understand "What is a sunset clause?"

What is a sunset clause?

A sunset clause most commonly appears in a contract for off-the-plan sales, either for apartment blocks or unregistered vacant land.  This clause sets the date that a contract may be rescinded (wound back) or cancelled without penalty, by either party if conditions are not met.

Sunset clauses may allow a period of 12-36 months (if not longer) for the developer to have the property ready for settlement.  They also provide that this period can only be extended by a further 12 months past the original date.

What does a sunset clause achieve?

The intention of a sunset clause is to protect the purchaser from being tied to a development that never gets completed, and to protect the developer by ensuring that purchasers cannot pull out of settlement if the project is completed in accordance with the sunset clause.

What is the current situation?

There has been a great deal of media attention on sunset clauses due to the tactics of some developers to use the sunset clause to their advantage in a market where we are seeing great price increases.  Allegations have been made that some developers are delaying construction to push past the sunset date.  This allows the developer to pull out of the contract and then put the property back on the market for a higher price.  In the current market this can yield significantly higher returns.

This affects purchasers as their deposit has been tied up in a development that has essentially put them out of the market since the time they paid their deposit.  This could be for a period of 2 years or more, meaning many can now not afford what they originally signed up to purchase.  It also affects confidence of purchasers, particularly in relation to off-the-plan sales with those involved in the above situations stating they will not consider purchasing off-the-plan again.

What is being done to prevent this in the future?

Consumer protection is high on the agenda of Victor Dominello, the Minister for Innovation and Better Regulation.  In the past week he has announced two potential options to prevent or avoid these situations in the future.  The options are:

  1. To imply a term in all off-the-plan contracts that only allows the purchaser to rescind. This arrangement aligns with that in Western Australia. 
  2. To imply a term where if the vendor rescinds a contract under a sunset clause and then resells the property within a certain period of time, the purchaser is entitled to damages equal to the difference on sale price between the two contracts.

Such proposals will turn the Sunset Date clause on its head.  Purchasers previously affected by the underhanded tactics of developers have welcomed the reforms with the hope no one will have to endure their experience in the future.

Consultation with various stakeholders regarding off-the-plan contracts and the reforms have commenced and the wider community can take part by completing the survey at http://www.fairtrading.nsw.gov.au/ftw/About_us/Have_your_say/Buying_property_off_the_plan.page.

If you would like to know more about off-the-plan contracts or sunset clauses please contact the Conveyancing Team at Coutts Solicitors and Conveyancers on 1300 268 887.

First Home Buyer

Lately the prices of land and new homes in the local area have dramatically increased compared to 12 and even 6 months ago. Because of this there’s been a lot of confusion about First Home Buyer incentives and the thresholds that apply.  

There are currently two really great first home buyer incentives available. The first is a stamp duty exemption or discount and the second is a grant.

Stamp duty exemptions and discounts - Vacant Land

First Home Buyers of vacant land are eligible for a full exemption from stamp duty if the value of the land is not more than $350,000.

First Home Buyers of vacant land are eligible for discounts on stamp duty if the value of the land is between $350,000 and $450,000.

Stamp duty exemptions and discounts - Brand new homes

First Home Buyers of new homes are eligible for a full exemption from stamp duty if the value of the home is not more than $550,000.

First Home Buyers of new homes are eligible for discounts on stamp duty if the value of the home is between $550,000 and $650,000.

Unfortunately if the value of the land or new home is above these thresholds, full stamp duty is payable.

Grant

First Home Buyers are eligible for a $15,000 grant if the total value of the property is not more than $750,000. This grant reduces to $10,000 on 1 January 2016.

The above information only sets out the thresholds, it is also important to note that there is criteria you must meet in order to be eligible and so if you think this might apply to you and want some more information  contact our office by phone on 1300 268 887 or click here to register for a call back.

*This information is current as at January 2015

The New Home Grant Scheme

I have many clients who ask me about the New Home Grant Scheme with government incentives for non-first homebuyers. Non first home buyers are someone who owns property or has owned property before. It pays to buy vacant land, new homes or off the plan … it pays $5,000! That’s right, for the purchase of vacant land, brand new home or off the plan, the government will give you $5,000 toward the payment of stamp duty as part of the new home grant scheme.

Here’s the ‘catch’ (you knew this was coming):

  • The value of the new home can’t be more than $650,000
  • The value of the vacant land can’t be more than $450,000
  • Purchasers must be Australian citizens, Australian residents or an Australian-owned bodies
  • Each purchaser is limited to one grant per financial year
  • For vacant land, construction of the home must begin within 26 weeks of the completion of the purchase
  • The grant is not available for the purchase of an existing home to knock down and build and a new home on the land
  • Doesn’t apply for vacant land or brand new homes intended to be used for commercial or industrial use

Provided you comply with all of these requirements, you’re eligible! What are you eligible for? It’s called the New Home Grant Scheme and it’s a $5,000 contribution toward your stamp duty. Sounds good to me, I mean stamp duty never looked so good for non-first homebuyers, so what are you waiting for? If you would like to apply for this $5,000 amount our Conveyancing department can help you apply.

Has this sparked more questions? Contact us on 1300 268 887 or click here to register for a call back.

*This information is current as at January 2015.