Should I make the most of the Qld First Home Buyers Grant and free stamp duty??

Hi King,

King wrote:

I have a lot of questions but I guess a good place to start would be this one.

And what a good question it is, King. You are obviously no stranger to the tenets we hold in this place, as you nicely presented the pros and cons of the situation. A good discussion around this area would help many, so let’s go……

The QLD First Home Owners Grant is being boosted to $20k after July 1st 2016. Now, the catch is that it needs to be a new property and I have to live in the property for 12 months in order to qualify.

I think it was Robert Kiyosaki that said “We pay a huge premium for wanting to live in our own home.” By that, I think he meant that there is litte in the way of Govt incentives for us unless we are providing accommodation to others. This FHOG is only a little help aimed at the “battler”.

But wait, how many battlers can afford to buy a new home? Perhaps only those who already have equity in their old one, hence no longer a “First Home Owner” anyway. And then, when large development marketers get wind of Govt assistance, it allows them to lift the selling price somewhat (all paid for by the Govt – or read “You and me”). So who really is winning through this?

This means I would be buying a property with no manufactured growth potential and I don’t see there being too much capital growth in the near future as the areas I would need to buy in would be saturated with new homes.

King, you really have been paying attention – well done. So yes, you would get a $20k “leg-up” to buy a new property that will have had its price lifted by $20k and more, and be liable to “no equity growth” for a few years after that. Sounds awful !!

What of other options?

Instead, have a chat with knowledgeable people about the FHOG – could it be that (if you are NOT buying a new home now, but an Investment Property instead) you may be still eligible for a FHOG in years to come once you have built up a deposit of your own via equity growth in the IPs?

Instead, if you buy an IP that is NOT new, you may well be able to purchase it at the kind of price that will have you gain $20k (and more) in equity immediately you settle on it. Of course, you would need your own deposit for this – but there can be other “ways” this can work. Since you are employed, that is a great start.

FHOG rules tend to “move around” depending on the Govt in power and the economical climate at the time. I was able to use the FHOG to purchase an existing property as our first home over 30 years ago….. Also, both State and Federal Govts have a part to play, so other State Govts right now might have a scheme more beneficial for you, if a move there suits your situation !!

Food for thought….

I’m sure there are MANY other sides to this that I haven’t mentioned. Let’s see what others bring to the table……

Benny

Hi again,

King wrote:

But again, if I were to buy an established property with the plan to renovate and sell, I wouldn’t be able to live in it while I am renovating – which could prove a little difficult. I could live in the IP during renovations, but I just wouldn’t be able to claim the FHOG in the future – but is that really all that bad??

Not that bad at all, as you then have the option (and BENEFIT) of being able to NAME it as your PPOR, and that means you may be able to enjoy a CGT exemption upon sale…. (Lots of conditions, but quite feasible).

It’s all swings and roundabouts. Main thing is that you KNOW how these all work, or take steps to FIND OUT how they work before getting on them !! ;)

Benny