At the risk of sounding stupid.
I have a decent amount of money to use as a deposit and am also eligible for the FHOG. Can I use this for an +ve cashflow investment property?
This would then give me a slightly wider price range to purchase my first IP. Or finding a cheaper one and not wiping out my savings completly.
Positives and Negatives: on lending more and keeping some money put away or using what you’ve got and lending less?
PS. Happy fathers day you dads out there!
Well the FHOG is designed ta assist to purchase your home.
I understand that whilst there is no minimum period you must live in the property the OSR is actively auditing people and the they are asking for proof that the property was your home for a three month period.
So I hear on the grapevine,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Thanks Simon
As I have no intention of actually living in the property, even for three months. Is it a safe bet to say I can not use the FHOG for the IP? Also if I do purchase an IP and not live in it does that purchase or further IP purchases make me ineligible for the FHOG when I want to buy a HOME.
Chris
Buying an IP and not living in it does not preclude you from using the FHOG later on to buy a home.
There are other factors to consider though.
Have a good read of the FHOG section on the site:
If you are in another state then use your states one. The rules are the same though as it is a federal initiative.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985I spoke to the State Revenue QLD, about two months ago. They stated; there is no set time frame you must live in the property, however you must live in it within 12 months of settlement date.
But if they are looking into it, that’s good. It’s designed to assist people to purchase their first home, people who generally need it, especially now with the increase in the property market,not investors.
If people took this approach and they investigate, the govt, (and sounds like they are), it will stuff it up for everyone who could realy use it.
Why don’t you try methods like non-refundable gifts from the vendor or approaching the vendors to leave equity in the property, maybe as a loan to you.
Hey Chris,
I am 100% sure that you cant use the FHOG for an investment property. I looked into it awhile ago, so unless things have relaxed (I doubt this), it should still apply.
Also, if you purchase with another person that has previously bought property, you aren`t eligble for it either. Might be wrong on this one though, it was a while ago…
Scott
My sister is a solicitor and her firm deals with clients in Vic who are being investigated re: FHOG.
Her view is that you must live in the property for 12 months or you will have to give back the $$ if you are investigated.
Spidey. [}
]I just spoke to a fellow being audited and he was asked for proof covering a three month period.
Scott,
You are quite correct. If a partner in a home purchase has used the FHOG or owned a home before then you cannot get it. In addition if you then reside in that property you will never get it either.
There are ways around this. I have mainstream lenders who will allow the first home owner to be on the title and the loan with a second applicant being a co borrower. This satisfies the OSR legislation. I commonly do this where a parent helps a child whose income isn’t high enough to qualify for the loan, whereas if the parent was on title the FHOG would be forfeited.
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Thanks for that extra info Simon. I haven`t looked too much into loan structuring yet, I think I should. Maybe it will help me decide the best way to go.
Speaking of going, time to go to work.
Scott
Thanks to everyone for the help!
I am happy to know that I can still use the FHOG at some later stage and can still buy some IP’s first.
(Thanks for the link simon I’ll check it out)
Chris
Hi guys,
I know I’m late, but thought I’d put in my 2 cetns’ worth (been working long hours lately – another reason why I need those positive cashflow properties).
There is absolutely NO legal requirement to live in the place for any minimum period in order to qualify for the FHOG. As long as you can prove that it’s your PPOR, you could stay there for only a week and still qualify for it. That said, it’s obviously going to be very hard for you to prove that if you moved in for a week and then moved out. That’s also probably the reason the FHOG auditors/investigators are asking for proof of 3 months’ residency. But I reckon it’s just a practical threshold, on the basis that if you’ve lived in the place for at least 3 months, it’s going to be quite hard to prove it wasn’t the PPOR, unless a rorter was stupid enough to admit that to them.
If you don’t believe me, read the FHOG Act (pick any State). If someone can prove me wrong and show me where in the Act (any of them!) it says you have to live in it for a minimum period of 12 months (or any minimum residential period, for that matter), I’ll send you a bottle of Goundrey Chardonnay (I have too many sitting in my place as it is). And I’ll pay the postage too.
Check out my other posts on this topic – I’ve done quite a few now.
Cheers
MElysium,
You are quite correct as to the wording of the legislation. I posted them same information as this up til very recently.
That is until I spoke to a chap that had been audited and the interpretation of the legislation the auditors were using was a three month proof required including such things as changes of address, utilities in their name etc.
He also had a relative who was required to repay the $7000 as he couldn’t prove this.
I think you need to be very wary advising people to act intentionally outside the spirit of the act. I know I wont.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Hi Elysium-M and Mortgage Hunter,
I am confused – I thought there had to be 12 months occupation of the home as well. May I quote from Explanatory notes – Qld OSR Duties act 2001 Section 282.
There is an obligation to notify the OSR if any of the borrowers who signed the declaration :
a) fail to take occupation of the residence as their home within 1 year after the later of the transfer date or the date the mortgage was first signed: or
b) dispose of all or part of the residential land without having occupied it as a home: or
c) dispose of all or part of the residential land within 1 year of occupation as a home.
Residential land is disposed where all or part of the land is:
a) transferrred: or
b) leased or otherwise exclusive possession is granted to another person.
Q. Maybe section c is the section some people are querying ? The area that states “within 1 year of occupation”. Can any legal eagles answer this area (Qld) please ?
Confused and getting more confused []Hi Simon,
You said:
I think you need to be very wary advising people to act intentionally outside the spirit of the act. I know I wont.I’m not advising people to act outside the spirit of the FHOG Act, and am surprised that you thought that I was doing so. If you take the trouble to look at my previous posts on this issue, you would have realised that I am quite opposed to people rorting the system. I think that not only is it illegal, it’s reprehensible. I thought it unnecessary to belabour the issue in this post, since I already said to look at my previous posts.
But what I get really worked up about are people who spread misinformation. There is no requirement to live for any minimum period – not 12 months, and not 3 months. Sure you still have to prove that you lived there, but if it was your legitimate PPOR, I really don’t see how you have anything to fear. If you were trying to rort the system, then I hope you get caught out and not only have to pay back the $7,000, but also the $7,000 penalty, and also get convicted for defrauding the Commonwealth and get hit with a $20,000 fine! But if you were honestly living in the place as your PPOR, and didn’t meet the 3 month requirement (eg you moved in on month 11 after you settled on the property, and get audited on month 12 – ie you’ve only lived there for 1 month) – you should bl@@dy well fight any attempt by the government to make you pay the money back! The Qld State Revenue Dept. may set its own internal guidelines, but that is NOT the law. And just because they do it doesn’t mean they’re right.
Brownwombat – you’re looking at the wrong Act. That section you quoted deals with concessional stamp duty treatment on mortgages. It’s the First Home Owner Grant Act 2000.
Anyway, if it’s not in the Act or the Regulations, it ain’t the law (I know it’s simplistic, but mostly true). Looks like I get to drink my chardonnay myself…
Cheers
MElysium,
Please forgive me if I have offended you. That was meant to be friendly advice not a suggestion that you were less than honest. I worded it badly as I often do. My fault entirely.
But spreading misinformation? That is a little harsh isn’t it? [
] Everything I have written is true. They are auditing and requiring three months proof.Anyway to move on.
The spirit of the legislation is to assist people to buy a home.
If they purchase a home for a week or a month and then rent it out I would suggest that in some cases it wasn’t really their intention to buy a home at all but to purchase a rental property with the assistance of the FHOG. I wont be knowingly involved in that. I consider it unethical.
I know that the guidelines specify no minimum period.
I also know that the auditors are becoming quite aggressive about targetting people who have misused the FHOG and anecdotal evidence suggests that the period of proof requested is for a three month period. I would hate to think that I caused a client trouble over $7000 because I encouraged him to claim the FHOG for something that was never intended as a home.
I don’t think there would be too much problem if it was occupied for three months from the 11 month period. I believe the reason the act was worder within 12 months was to allow any existing lease to expire before an owner moved in and this could conceivably be for 11 months after purchase.
I am not suggesting that this 3 month period is right or wrong. But it is happening.Once again sorry if I offended you – I never really intended to.
Cheers,
Simon Macks
Mortgage Hunter
[email protected]
0425 228 985Hey Simon,
Don’t worry – you haven’t offended me mate.
My post, as with all my comments on this forum, are always intended to have general application. When I use “you”, I simply use it as a convenient label (I guess I could use “a person” or “someone” instead).
I agree with your sentiments, however my views are much stronger, in the sense that in my line of work, I have had many dealings with different State Revenue departments, and the honest truth (based on my experience) is that they will on occasion take an unreasonable and unjustifiably (ie no legislative support, and therefore incorrect) hardline, which causes the taxpayer to lose out, whether because the taxpayer decides that it’s not worth the trouble and expense to fight it, or because the taxpayer has to spend considerable sums of money on legal fees to fight it (and I’ve had a few wins too!).
You’re taking the practical approach, and there’s nothing wrong with that. I think it’s a sensible approach. You’re right of course – most homebuyers would not have the resources, time or inclination to fight the OSR, and even if they do, it becomes quite damaging emotionally and financially.
What I was trying to get at is that people should not simply be told that there is a minimum period of residence required. They should be given the choice to decide whether, based on their (legitimate) intentions with their intended PPOR, there may be difficulties in the future. For example, I’d hate to think that there’s someone out there who decided not to claim the FHOG because they were told that they had to live in it for 12 months, and they (for whatever personal reasons – eg work) could not commit to that requirement.
I myself should apologise for not writing my post in a way that made you think I was attacking you.
Please don’t stop posting your opinions – they are of course useful and valuable to us all.
Cheers
M
Hi guys,I know I’m late, but thought I’d put in my 2 cetns’ worth (been working long hours lately – another reason why I need those positive cashflow properties)
There is absolutely NO legal requirement to live in the place for any minimum period in order to qualify for the FHOG. As long as you can prove that it’s your PPOR, you could stay there for only a week and still qualify for it. That said, it’s obviously going to be very hard for you to prove that if you moved in for a week and then moved out. That’s also probably the reason the FHOG auditors/investigators are asking for proof of 3 months’ residency. But I reckon it’s just a practical threshold, on the basis that if you’ve lived in the place for at least 3 months, it’s going to be quite hard to prove it wasn’t the PPOR, unless a rorter was stupid enough to admit that to them.
If you don’t believe me, read the FHOG Act (pick any State). If someone can prove me wrong and show me where in the Act (any of them!) it says you have to live in it for a minimum period of 12 months (or any minimum residential period, for that matter), I’ll send you a bottle of Goundrey Chardonnay (I have too many sitting in my place as it is). And I’ll pay the postage too.
Check out my other posts on this topic – I’ve done quite a few now.
Cheers
MJust because you can’t find anything to prove you wrong doesn’t mean you right my friend, most of that legal jargon isn’t even english. Will that plonk be cold ?
The way this government is heading, with it’s cutting back all different type of programs you’re mad if you don’t take it ( FHOG ), because tomorrow it mightn’t be on the table to take ! After all the worse thing that could happen to you, is having to pay it back. [
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] Everything I have written is true. They are auditing and requiring three months proof.
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