To date I have not yet purchased my first home. I wanted to buy an investment property and rent it out. Does this mean I forfit my eligabilty to apply for the first home owners grant when I do decide to buy a home I will be living in.I have recently found out that you have to be residing at the property to recieve the grant.
Hi KBH, yep that’s my understanding – if you buy it to use as an investment then you don’t get the grant.
However, (this is not financial/investment advice, you need to check it out with your own accountant) I have heard that you only need to live in the place for six months. That six months has to start within the twelve months after you buy it. So ….(theory for you to check out…) in theory you could by your home, leave tenants in it for 11 months and some days, move in on day 363, live there for six months, and then move out and put tenants back in…….Food for thought…
Cheers
CDCastleDreamer
KBH,
Bear in mind that if you use the FHOG, you won;t be able to claim the buying costs, loan costs, etc as a tax deduction. Nor will you get rental income to assist in paying your loan off during that 6 months. Nor will you get the interest payments on the loan as a tax deduction.
You might wanna do a cost/benefit analysis to work out what’s best for your situation.
kay henry
hi kay,
Bear in mind that if you use the FHOG, you won;t be able to claim the buying costs, loan costs, etc as a tax deduction.What if the total of the buying costs, loan costs etc exceed $7000? Also, what might “etc” include?
Many thanks,
Steve.“Knowledge is Power”
Hi kbh,
if you buy an investment property, you won’t be able to get the FHOG for that property. However, if you never live in that investment property, you should be eligible for the grant when you buy the next property to live in (assuming that you satisfy all the eligibility criteria).
that is, merely buying an investment property, as long as you never live in it, will not disqualify you from getting the grant when you go and buy your PPOR next.
cheers
EDIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…
Hi KBH,
The govt recently changed the laws regarding the FHOG and now states that you must live in the property as your principal place of residence for at least 6 months within the first 12 months from completion/settlement. They actaully have a site set up with info on the new conditions, and sorry, I dont have it on hand, but if you search for it using a search engine, youll be able to find it straight away. This new change was so that people didnt rent the property out for 364 days of their first year and live in it for one day & claim the FHOG <– did that make sense? So now its up to you to prove that you lived in the property for at least 6 months within that first 12 month period. However, there’s nothing legally stopping you from renting it out for the first 6 months, living in it for the next 6 months as your PPoR, then renting it out again. You’ll still be eligible & legally entitled to the FHOG (provided it’s your first home etc etc)
Hope this helps! (“,)(“,) $$$ HoLdEnCoMmOdOrE $$$ (“,)
Hi elysium, have you done this? When you read the wording of the grant I am sure it says that you are not eligible if you have ever owned residential property previously – irrespective of whether it was an IP> Can you give me your reference?
Cheers
CDCastleDreamer
Yeah thats what my assumption was too ‘castledreamer’. Im confused[blink]
I have also asked this question on the forum on a couple of occasions. From the advice I was given and the research I have done myself, I will explain what I think using the following example. Let’s say my history is that I am single or in a relationship and neither myself or my partner has bought any property prior to july 2000. If I purchase a IP in Jan 2004 and then make it my PPOR prior to Dec 31 2004 then I am still eligible for the FHOG – only – if I make this IP my PPOR and not purchase another property for the purpose of becoming my PPOR – I will not be eligible if I try to claim the FHOG for the second property. Why? – Whether it is an IP or not, your first purchase is still classed as your first property and is the one that is tested for your eligibility of the FHOG. And if I purchase the second property without applying for the FHOG then I will lose the ability to apply forever. That is how I understand it anyway.
Hi guys,
Read section 12 of the First Home Owner Grant Act (WA).
If you owned any residential property before 1 July 2000, you’re automatically ineligible for the grant – s12(1).
If you never owned any residential property before 1 July 2000, but buy a residential property after this date, owning this property in itself will not disqualify you from receiving the grant, unless you live in that property – s12(3).
I’m pretty sure that there are similar provisions in the corresponding Act in the other States.
An easy way to try to understand how or why this works is the following principle: the grant is to help you get your first “HOME”. If you buy an IP, it’s not your home. Anyway, whether or not anyone agrees with me on this point is irrelevant for the purposes of s12: the law is clear.
Cheers
EDIY Residential Property Settlements in WA – the book coming soon! When I can get my act together…
Definitely agree with Elysium. Mortgage Hunter has the legislation on his site if anybody wants to check it out – for all states…
http://www.mortgagehunter.com.au
Cheers
Mel
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