$25k Home Builder Grant explained

The Australian government announced earlier this month that grants of $25,000 will be made available to eligible owners to build a new home or extensively renovate an existing one.  This is not limited to first home buyers, but rather owner-occupiers who meet the eligibility criteria.

• New builds MUST be for a principal place of residence with the combined value of house and land not to exceed $750,000.
• Those wanting to renovate their existing home must commit to improvements between $150,000 and $750,000, with the residence not exceeding the value of $1.5 million prior to the renovation.
• The renovation must be “to improve the accessibility, safety and liveability” of the home such as a kitchen and bathroom and be undertaken by a qualified and licensed builder. Unfortunately our dreams of a resort at home won’t be paid for by the government with the restriction of unconnected additions, such as detached sheds or garages, swimming pools, tennis courts, spas and saunas.

The government has stipulated the following criteria MUST be met:

• INCOME –
  • For Individuals – income for 2018-2019 tax return or later must be below $125,000 (gross income excluding superannuation).
  • For Couples – combined income on your 2018-2019 tax return or later must be below $200,000 (gross income excluding superannuation).
• CONTRACT –  must be signed after 4th June 2020 and before 31st December with a licensed or registered builder.  No owner builders and no claims for contracts signed prior to June 4 (even if construction has not yet commenced). All building and/or renovation contracts entered into must be at arm’s length. Meaning the contract must be made by two parties freely and independently of each other. The terms of the contract should be commercially reasonable and the contract price should not be inflated compared to the fair market place

• OWNER-OCCUPIED PROPERTIES ONLY, no investment properties will be considered for the grant
• CONSTRUCTION must commence within 3 months of contract date. Example – contract signed 1 July 2020, construction must commence on or before 1 October 2020.
• NO COMPANIES OR TRUSTS,must be purchased in individual names
• AUSTRALIAN CITIZENS ONLY, the scheme is not available to non residents, permanent resident’s or New Zealand Citizens

Whilst these grants are a great boost to any owner-occupiers looking to build or renovate, you may not necessarily be able to include the $25k HomeBuilder as part of your deposit cost.  The Australian Government has not provided set time frames for the payments stating “Information on when and how you will be able to apply will become available through the relevant State or Territory revenue office in due course“.  Meaning the banks, (at this stage), won’t be able to include the $25k as part of your deposit or to reduce LMI costs.  However, the good news is, as soon as the the dates for payment are released by the states and territories, the money will be paid directly to you.

YES!! If you meet the criteria for both then you can apply for both.  Each state and territory has their different requirements for the First Home Owners Grant (you can check out the details on your state or territory page listed below)

Local state and territory revenue offices will be responsible for applications.

HomeBuilder applications can be backdated to 4th June 2020 once the official agreement has been signed.

If you would like to discuss your options with your broker, please contact our office