Hi there
I just saw on the news that most states have loopholes for the FHOG so kids as young as 12 months are taking the grant and the parents are using this for investment properties.
I cant believe this to be true.
Is this really true? One state they say it can’t be done is SA and NSW closing on it now, but most other states it can still be done.
Not very ethical, however i guess loopholes are there to be used.
Any feed back?
Regards Bear
Hi Bear,
I know you’re a regular, and I read many of your posts, but I have to disagree that loopholes are there to be used. I hope they close up every loophole in the FHOG legislation as soon as possible, to stop people rorting the system more than is already the case. FHOG should only go to people who are buying their first home. At the end of the day it is you and I who are paying for these people to abuse an initiative that was meant to give people a leg up in getting into the market.
I hope that ANYONE who tries to rip off the FHOG system gets caught and feels the full weight of penalties.
My two cents.
RHi Bear,
Can you explain where the loophole is, because I thought you had to have ‘entered into a contract for the purchase of a home’ to qualify – can 12 month year old kids enter into a contract to purchase a home?
I once spoke to an accountant who recommended I change my address with the RTA for a couple of weeks so I would qualify for the FHOG on an investment property. I decided this wasn’t the kind of person I wanted to work with.
I have no problem taking money from the government when its legitimate, but not when your own ethics are at stake.
-Nick
Hi Richmond and Walkernick
I guess I didn’t explain myself very well.
I had no intentions of using this loophole myself, my point being if the govt leave loopholes people will always use them to their advantage, wether it is for tax or other purposes.
I couldn’t believe this to be true.
I saw it on the 6 o’clock news on channel 9 this evening and I was shocked to think there would be such a loophole.Walkernick I have no idea where the loophole is, however it seems SA never had it, and NSW have closed it.
This topic was bought up for discussion coz I know how the news services have a tendency to make up stories. Not that I had any intentions of using it, especially considering I reside in SA.
I hope I have clarified my position on the matter.
Regards Bear
I thought a condition of the FHOG was that you reside in the property. Is this not the case? I would be pissed off to think that my taxes are subsidising people buying investment properties.
There are a number of loopholes in the FHOG scheme. I know that my parents can come over from NZ, buy a property and qualify even tho they have owned properties over there. Legal – yes! Ethical – No!
Not sure whether it was a current affair, or 60 minutes or one of those that showed people (the report focussed on Malaysians but I am sure they are not the only ones) using the FHOG to purchase multimillion dollar Sydney harbourfront properties. Makes you wonder whether they would even notice a $7,000 discount.
Unfortunately some people in this world believe they are entitled to something for nothing. The Karma fairy will catch up with them eventually.
Fibejebe.
This topic was bought up for discussion coz I know how the news services have a tendency to make up stories. Not that I had any intentions of using it, especially considering I reside in SA.I hope I have clarified my position on the matter.
Regards Bear
I thought the point they were trying to get across was were a family were looking to purchase a new property they would purchase the new property in the name of the child with the parents having power of attorney over the childs affairs. As this would be the first home purchase for the child then they are entitled to the FHOG.
Now for my two cents worth about the FHOG. The FHOG is a disgrace. Any government funded scheme that artificially changes the housing market is bound to cause trouble. The FHOG has contributed to a number of issues:
– artificially increasing housing prices
– creating new suburbs with no infrastructure as first home buyers seem to desire brand new homes
– created a glut of rental properties where vacancy rates in some areas are getting close to 10%.
– pushing poeple into buying houses who can’t really afford them.Some builders even advertise that all you need is the FHOG and they can get you into a brand new house. Now if interest rates do rise (as they inevitably will) those people will be forced to sell.
The same thing happened back in 1987 when Keating removed negative gearing. Investors pulled out of the market and rents skyrocketed.
As they said on the radio yesterday morning, “You can just imagine babies at an auction… making dummy bids!!”
Lozza
I am appalled with loopholes in the law that people abuse that’s why I bought this up.
Another one that really annoys me is Sole parents living in a same sex relationship. I knew of a lesbian couple one on the sole parent pension and the other working full time job earning very good money. The Father of the kids had to pay 32% child payments of his wage and struggling had to sell his house. They are entitled to rent assistance also.
I can’t believe this Govt is this stupid!…… LOL……….. Or can I!
Ethical, no not at all, but the govt knows about it and do nothing to stop it. People will always take full advantage of the loopholes. I personally wouldn’t be able to live with myself, some people don’t have a conscience.
Regards Bear
Why not turn a positive into a negative? Would you rent your property to tenants who were in that situation. Just look at it; guaranteed income and if they have a good credit history; why not?? Possibly even an opportunity for a wrap??
I know of a certain bank (which bank) that has in the past gladly lent money to people in this situation (one on the dole and one on supporting mothers pension). Banks will also take child support payments into account when assessing someone’s income.
Hi,
Actually I’ve found banks are very reluctant to take child support payments into account for loan servicing. They will take all regular government pensions though including Family Allowance which most low-income and single parent families are entitled to receive.
It’ll be interesting to see how the FHOG legislation gets changed. As Bear said it’s hardly the first loophole around and certainly not being plundered for the many millions extra every week that other welfare payments continue to be.
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Mel
[email protected]I think it’s disgusting that people take advantage of the system. I have never considered trying to “get away” with using the FHOG for an investment property.. I see that I have two choices, buy a house for myself and get the FHOG, or buy an investment property and dip out, too bad.
There’s one thing that I find particularly disgusting about this issue of children getting the grant.. parents are USING their children to get money. I think that’s gross.. kids are not investment tools. They are not a way to increase your income.
*shudder*
Hi Dingo
My point being is that they are ripping the system off. One works full time the other is on the pension and it is all Legal. Gees imagine if we all did that in our realtionships? Its a loophole that needs to be closed.
Regards Bear
Why not turn a positive into a negative? Would you rent your property to tenants who were in that situation. Just look at it; guaranteed income and if they have a good credit history; why not?? Possibly even an opportunity for a wrap??Bear
Don’t get me wrong, I don’t agree with the way people can rip off the system. The point is that there are always going to be inequalities and loopholes; the winners are the people that can use these loopholes to their advantage.
We all try and reduce our tax bill using what we would percieve as legal methods. If the government says you can do it why wouldn’t you do it.
What is the actual advantage of buying a property in your childs name? Apart from receiving the $7,000. It’s only “legal” if you were to move in and have that property as your main residence.
Even as an investment property, how can a property in your childs name be an “investment to you”. You are no longer entitled to claim deductions, yet obviously you would be paying for the purchase. I don’t know too many 1 year olds making an income.
Today’s West Australian has figures for the number of homes between $500,000 and $1M that have received the FHOG, the number of recipients that had been successfully prosecuted and the number that had been requested to repay. Can’t tell you the figures as I was sitting in a coffee shop sipping a latte and reading their paper[
] The loophole for babies will be closed as will grants for purchases over $500,000 but it will take some months. Having studied law in Melbourne back around when the Ark was being built I cannot but wonder at those that write legislation. We were taught to read read and read again all proposals before submitting them. What type of lawyers are writing our legislation that they cannot even follow this most important and simple rule to make certain that loopholes never exist?I agree Judith
We pay big money for these monkeys to write these laws and legislations out but they cant even do what sometimes I believe my 9 year old daughter can do..LOL
I am against abusing the system, but one must say if they are stupid enough to leave loopholes why wouldn’t we use it to out benefit? I for one would use some loopholes to my advantage. But my conscience would stop me on others.
I ask this question, would the Govt use a loophole to get from us the most they could?
HMmmmmmmmm worth pondering on
Regards Bear
I beleive loopholes are left in on purpose. So all the fat cows sitting on top can use them. Then when common man finds out about them, thats when they get closed.
cheers
V
Just to add my two cents worth, I am reasonably disappointed with the FHOG. Back many years ago, I purchased an investment property, paid all the appropriate taxes etc etc, and rented it out.
When it came to buying my first home two years ago, I wasn’t entitled to the FHOG, as I had already owned a house.
Where is the fairness in that? It’s never been a true FHOG. Its been a first house/bit of property grant.
If I had invested in shares instead, I could have gotten the FHOG for my home.
And the govt still got all the extra stamp duty for the investment property as well.
That’s my spit!![}][!]Castle Dreamer, There are many of us who have never received any help with buying our home or investment properties. Sorry but I can’t see that you have anything to complain about as you did manage to find the funds to purchase a property that could have been your own home but you chose to have it as an IP. There were many reasons the FHOG was introduced, introduction of GST, affordability with the huge prices that must be paid on the east coast and to give the building industry a boost. As builders I can tell you that the industry is very competitive and we have never worked as many hours for as little return as we are at present. Project builders have huge buying power and beat the socks of the little guy price wise. The FHOG has helped them sell more homes and employ more tradesmen but now it is hard for us non-project builders to get tradesmen ie electricians, plasterers and plumbers as they are flat out with guaranteed on-going project work. I hope you managed to make a profit from your IP and that you can soon afford your very own PPR.
Hi All
The subject of loopholes is a very interesting one indeed. I myself have been useing loop holes in the tax system for many years to reduce my tax burden on my bussiness. I am of the same thought as Forward, the loopholes were put there for the use of the hi & mighty. Or for those who grease the parms of the average political member. If by some chance a nobody like me finds out about it, then well and good. As long as you are NOT doing any thing that is against the law.
I do feel sorry for you Castle Dreamer, the fact that you could not get the FHOG is one of those things that people look at and say WHY ! If a 12 month old child can ge it why can’nt you. Seems to be some type of double standard. Opps how dare I use such a phrase in this counrty were double standards aparently do not exsist.
Well I must go before I start on the things that shoud not be spoken about in open forum.
Regards to you all
Craigc
]
] The loophole for babies will be closed as will grants for purchases over $500,000 but it will take some months. Having studied law in Melbourne back around when the Ark was being built I cannot but wonder at those that write legislation. We were taught to read read and read again all proposals before submitting them. What type of lawyers are writing our legislation that they cannot even follow this most important and simple rule to make certain that loopholes never exist?
!]
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