Hi All,
Great forums. You guys are very helpful (and suprisingly practical for an online forum!).
I have questions about the conditions of the FHOG and also the Stamp Duty Concessions Policy in Queensland.
Myself and a friend are both looking to spend an equal amount on our first property. Actually we are both looking at buying practically identical apartments in the same complex. We are aiming to be eligible for the $14K FHOG grant and the Queensland Stamp Duty concession (waiver for properties under $500K).
Our idea is to take separate interest-only loans, live in one apartment together for 6 months paying interest and reducing the principle while renting the other out to cover the interest only, and then after 6 months do vice-versa (shifting the amount we have paid off in principle to the second). Assume the income from the rent will cover the interest-only payments on the one we rent out.
I know there are many pros and cons of whether this is a good strategy (and Im happy if you have advice aout that too) but I am specifically confused about our eligibility for first home owner benefits in QLD. In this scenario I am pretty sure that we meet the eligibility for the actual FHOG (the grant), but I am not so sure about the Queensland Stamp Duty Concession.
The FHOG says you must live in the property for at least 6 months within the 12 months. I don't think it matters what happens in the other 6 months (ie. you are able to rent it out if you wish). If you think that is not te case let me know.
However the Queensland Stamp Duty Concession is not so clear. I've been on the phone to the Office of State Revenue (www.osr.qld.gov.au) and on different occasions had conflicting advice from different people.
Some say that to be eligible we can not receive any rental income on the property at all within the first 12 months.
Others say that you must have the property as a principal place of residence for the full 12 months to be eligible for stamp duty waiver.
Others say they have seen cases where people have recieved the concession when purchasing a property that is already rented to a tenant and the lease continues for a period of 3 months after settlement.
I've also heard that after the 12 months is up you might have to pay a percentage of the stamp duty proportionate to the percentage of time spent as resident of the property within the 12 months! (Sounds a bit far fetched)
Others say that the same condtions as the FHOG apply (6 months within 12 months)
Other advice I have heard says that you cannot take an interest-only loan and recieve the FHOG at all! (any advice on that?)
Can anyone help clear these questions up? I cant really afford a financial advisor/solicitor to figure this out for me and the OSR phone service advisors are hopeless! (I asked 4 completely different questions of one woman and recieved the same answer becase she just kept reciting the script in front of her without even thinking about what i was saying.)
Any help interpreting QLD OSR policy greatly appreciated
cheers
denormaliserOk it is 2.11am so you only get a quick answer.
Others say that you must have the property as a principal place of residence for the full 12 months to be eligible for stamp duty waiver. This is correct.
Others say they have seen cases where people have recieved the concession when purchasing a property that is already rented to a tenant and the lease continues for a period of 3 months after settlement.
I've also heard that after the 12 months is up you might have to pay a percentage of the stamp duty proportionate to the percentage of time spent as resident of the property within the 12 months! (Sounds a bit far fetched) Absolute rubbish
Others say that the same condtions as the FHOG apply (6 months within 12 months) This is not the case.
Other advice I have heard says that you cannot take an interest-only loan and recieve the FHOG at all! (any advice on that?)
Same as above absolute rubbish.
Richard Taylor | Australia's leading private lender
denormaliser,
I assume you know that your PPOR doesn't need to be lived in? That is you can do what you said you wished to do. For the first 6 months it would be the owners start up PPOR and you can move out for up to 6 years and it can still be your PPOR as long as you don't claim another place when away?
Like wise for the second place.Here is my understanding of the way it works.
SD concessions for first home buyers and the FHOG are not interlinked. With the FHOG you must move in within a certain period of time (you may well be right you when you say that you must live there for a minumum of 6 months within the first 12 months). However you do not have to move in immediately after settlement. If you have purchased a property with a tenant then in most states you can't kick that tenant out on settlement. You must allow the lease to run out. So the FHOG takes this into account. This means that you can receive a rental income on a FHOG property prior to you moving in.
However, the SD concession works differently. To be eligible for the SD concession you must be a first home buyer moving into your PPOR. The ATO does not have a clear definition of requirements for a PPOR. It says that when purchasing a property it must be your INTENTION for it to be your PPOR. There is no timeframe. However, as a general guideline, the ATO accepts that if you live in the property for 12 months then it was your intention that it be your PPOR. There are circumstances when you don't have to live in the property for 12 months. For example, if you are in the ADF and you get a short notice posting to another state then the ATO may give you a bit of latitude. But if, at the time you bought the property you knew that you were going to get posted interstate in 3 months time, then the ATO would probably say that it was not your intention for it to be your PPOR. Another example is if you get sick or lose your job or have a family tragedy that necessitates you selling the property.
So in terms of the FHOG, what you have proposed is probably OK. Your friend is moving into her property immediately and she is getting a flatmate. You are not required to move into your property for the first 6 months so you I can't see why you can't get a six month lease on it. You and your friend then move into your property and meet your FHOG requirements. That all seems fine.
However in terms of the SD concession, while you would be OK (you move in when the lease on the property has expired) and you intend it to be your PPOR, I think your friend would have trouble establishing that she was intending her property to be her PPOR. She has no real reason for moving out after only 6 months and the fact that she is moving into another unit in the same complex would not be viewed kindly by the ATO.
That's just my understanding. I am happy to be corrected of the policies have changed since looked at them a couple of years back.
CHeers
K
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