New Home Grant

First home buyer but struggling to buy on your own?

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Are you a first home buyer wanting to enter the property market, however are not able to purchase or finance a property on your own?

It is commonly assumed that when a first home buyer purchases property with a non-first home buyer, that they automatically “give up” the first home buyer incentive of an exemption or concession from stamp duty under the First Home Buyers Assistance Scheme.

 

However, this is not always the case. The First Home Buyers Assistance Scheme provides for Shared Equity Arrangements, which specifically allows eligible first home buyers to purchase with a non-first home buyer and still receive an exemption or concession on the portion of stamp duty due on their share of the property.

 

Sharing equity is a way to share the cost of buying property with another party, who is referred to as an equity partner. Accordingly, Shared Equity Arrangements are designed to assist first home buyers enter the property market even if they are unable to purchase a home on their own. For example, a first home buyer may purchase with their parent or a sibling as an equity partner in order to be able to obtain sufficient finance.

 

To be able to utilise Shared Equity Arrangements, the first home buyer must purchase at least 50% of the property and meet all other eligibility requirements. The First Home Buyer Assistance Scheme will then be applied to the first home buyer’s share of the property.

 

The balance of stamp duty payable is calculated on the portion of the property to be owned by the non-first home buyer. If the non-first home buyer will own less than 5% of the property, then their portion will be disregarded and the first home buyer’s exemption or concession will be calculated as if they were purchasing the property on their own. 

 

It is important to note however that a first home buyer is not able to utilise Shared Equity Arrangements with their spouse, or even with another non-first home buyer should their spouse have previously owned residential property in Australia.

 

If you are a first home buyer wishing to purchase a property with a non-first home buyer, please contact us and we can assist you in determining whether you are eligible for Shared Equity Arrangements and guide you through your first property purchase.

 

For further information contact:

Natali Vujica
Licensed Conveyancer and JP
natali@couttslegal.com.au
02 4607 2108

 

First Home Buyer Incentives Recap

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A year after the first home buyer incentive reforms were introduced on 1 July 2017, it is a good idea for aspiring first home buyers contemplating entering the property market to refresh themselves with the current first home buyer incentives, which are as follows:

 

Existing Homes

-          Exemption from stamp duty for property valued up to $650,000.00

-          Concessions on stamp duty for property valued between $650,000.00 and $800,000.00

-          No stamp duty on Lender’s Mortgage Insurance

 

New Homes

-          Exemption from stamp duty for property valued up to $650,000.00

-          Concessions on stamp duty for property valued between $650,000.00 and $800,000.00

-          $10,000.00 Grant for the purchase of a new home valued up to $600,000.00

-          No stamp duty on Lender’s Mortgage Insurance

 

Off the Plan

-          Exemption from stamp duty for property valued up to $650,000.00

-          Concessions on stamp duty for property valued between $650,000.00 and $800,000.00

-          $10,000.00 Grant for the purchase of a new home valued up to $600,000.00

-          A 12 month delay in payment of stamp duty (where applicable), deferring payment of stamp duty from 3 to 15 months from the date of exchange

-          No stamp duty on Lender’s Mortgage Insurance

 

Vacant Land

-          Exemption from stamp duty for land valuated up to $350,000.00

-          Concessions on stamp duty for land valued between $350,000.00 and $450,000.00

-          $10,000.00 Grant for a contract to build a new home or to owner build on the land with a total value up to $750,000.00

-          No stamp duty on Lender’s Mortgage Insurance

 

Please note that eligibility requirements apply to all incentives. If you are a first home buyer, we can assist you in determining which incentives you may be eligible for and guide you through your first property purchase.

 

For further information contact:

Natali Vujica
Licensed Conveyancer and JP
natali@couttslegal.com.au
02 4607 2108

 

Not a first home buyer? Property reforms may affect you too

Property reforms for non first home buyers

The recently announced property reforms commence from 1 July 2017. While they are aimed at assisting first home buyers, such reforms will also affect non-first home buyers as follows:

NSW New Home Grant Scheme

The NSW New Home Grant Scheme will be closed. This scheme currently provides eligible non-first home buyers, including investors, with a $5,000 reduction off stamp duty on purchases of new homes, off the plan property and vacant land and can be claimed once a financial year.

Stamp Duty for off-the-plan property

Deferring payment of stamp duty on off-the-plan property will no longer be available to investors. Currently all purchasers may defer paying stamp duty on off-the-plan purchases for 15 months, which provides an additional 12 months on top of the usual time frame of 3 months to pay stamp duty. Whilst deferring stamp duty will no longer be available for investors, it will remain available for purchasers who will live in a property that they purchase off-the-plan.

Duty on Lender's Mortgage Insurance 

Duty on Lender’s Mortgage Insurance will be abolished for all home buyers. Lenders Mortgage Insurance is required by many lenders for purchasers who do not have the required minimum deposit saved. Duty on Lender’s Mortgage Insurance is currently calculated at the rate of 9% of the premium.

Foreign persons - Surcharge Purchaser duty

Foreign persons need to pay Surcharge Purchaser Duty in addition to any stamp duty payable on their purchase. Surcharge Purchaser Duty will now be calculated at a rate of 8% of the dutiable value of the property, being double the current rate of 4%.  

Foreign Persons - Surcharge Land Tax

Foreign persons need to pay Surcharge Land Tax which is an annual tax in addition to land tax. Surcharge Land Tax will now be calculated at a rate of 2% of the taxable value of the property, increasing from the current rate of 0.75%. There is no threshold or principal place of residence exemptions for foreign persons.

Again, the above reforms come into effect from 1 July 2017. Accordingly, all contracts exchanged from 1 July 2017 will be subject to the provisions of the property reforms. If you would like to discuss how the above reforms may affect you, please contact Coutts today.