Are you eligible for $69,440 in building grants and exemptions?

Both the State and Federal Governments have recently announced grants and subsides to help kick start the construction industry. 

There has been a lot made of that fact that a lucky will qualify for benefits up to $69,440 when combining existing grants and subsidies with the two new packages.

So what are the new benefits, and how can you get that elusive $69,440?

1. Federal HomeBuilder: What is it and how do you access it?

2. WA "Building Bonus"

3. Are you eligibility for the Building, First Home Owners and Stamp Duty Grants?


 

Federal HomeBuilder: What is it and how do you access it?

The Federal Government has announced grants of $25,000 to encourage people to build a new home or substantially renovate their existing home.

The HomeBuilder scheme targets the residential construction market by providing tax-free grants of $25,000 to eligible owner-occupiers, including first home buyers, to build a new home or substantially renovate their existing home.

The grants will be distributed by the revenue office of the State or Territory where you live or plan to live.

There are a few complexities to this grant that both home builders/renovators and the building industry need to be across before jumping in and signing a new contract on the expectation that the grant will apply.

Eligibility

Eligibility criteria apply to the individuals applying for the grant and the building project:

Individual eligibility

The HomeBuilder scheme is available to owner occupiers including first home buyers. It is not accessible to owner builders, developers or investors.

To be eligible you need to be:

·       An individual (not a company or trust); and

·       18 years of age or older; and

·       An Australian citizen.

And, you need to meet the income test. To be eligible, you cannot earn more than:

·       Individuals - $125,000 based on your 2018-19 or later tax return

·       Couples - $200,000 based on both of your 2018-19 or later tax returns

The building project eligibility

The building contract must be signed between 4 June 2020 and 31 December 2020. And, the construction or renovation must commence within three months of the contract date.

The grants are available if you build a new home or renovate a home to live in (your principal place of residence) where:

 New home*  The property value (house and land) does not exceed $750,000
 Renovation**  Substantially renovate your existing home, where:

· The renovation contract is between $150,000 and $750,000, and

· The value of your existing property (house and land) does not exceed $1.5 million

* house, apartment, house and land package, off-the-plan, etc.
** renovation works must be to improve the accessibility, safety and liveability of the dwelling. It cannot be for additions to the property (such as swimming pools, tennis courts, outdoor spas and saunas, sheds or garages (unconnected to the property)).

If you own or have purchased land but have not signed a contract to build your home, you may meet the eligibility criteria if you:

  • Own a property (house and land), and knock down the house to rebuild – this will be counted as a substantial renovation, and therefore subject to the renovation price range of $150,000 to $750,000 provided the total value (house and land) of the property does not exceed $1.5 million pre-renovation;
  • Own vacant land before 4 June 2020, and then build, the total value of the land and new build cannot exceed $750,000; or
  • Buy the land after 4 June 2020, and then build, the total value of the land and build cannot exceed $750,000.

Integrity measures and pricing

Building contracts must be at arms-length, that is, the parties cannot be related or connected.

Renovations or building work must be undertaken by a registered or licenced building service 'contractor' (depending on the state or territory you live in) and named as a builder on the building licence or permit.

When it comes to price, the terms should be commercially reasonable, and the contract price should not be inflated compared to the fair market price. The rules enable the purchaser to request that the builder demonstrate that the contract price for the new build or substantial renovation is no more than a comparable product (measured by quality, location and size) as at 1 July 2019.

Interaction with first homeowner grant schemes

The HomeBuilder grant does not exclude first home buyers from accessing other grants and concessions such as the First Home Owner Grant, stamp duty concessions, the First Home Loan Deposit Scheme, and First Home Super Saver Scheme.

Problem areas

As the building contract is entered into before the grant is approved, it will be important that the grant is not essential to finance the building project, just in case the grant is not approved.

In addition, as the builder needs to commence work within three months of the contract date, it will be important to ensure that the contract recognises the commencement dates.


WA "Building Bonus" stimulus

Shortly after the Federal Government presented "HomeBuilder", the Western Australian Government announced a housing stimulus package aimed at delivering a major boost to Western Australia's COVID-19 economic recovery, and supporting the building and construction sectors valued at $444 million.

The housing stimulus package will deliver:

  • $117 million for $20,000 Building Bonus grants provided to homebuyers who sign up before December 31, 2020 to build new houses or purchase a new property in a single tier development (such as a townhouse) prior to construction finishing, creating 2,600 jobs;
  • $8.2 million to expand the 75 per cent off-the-plan transfer duty rebate, capped at $25,000, until December 31, 2020 to include purchases in multi-tiered developments already under construction;
  • $97 million to construct social housing dwellings and purchase off-the-plan units for supported housing programs;
  • $142 million to refurbish 1,500 existing social housing dwellings; and
  • $80 million for targeted maintenance programs for 3,800 regional social housing properties - including remote Aboriginal communities' stock and subsidised housing for regional government workers.

The Building Bonus package is designed to provide an ongoing pipeline of work in the residential housing construction market and is expected to support about 2,600 jobs.

Social Housing Economic Recovery package.

The social housing package, valued at $319 million, is to refurbish 1,500 homes as well as allocate $97 million to build and purchase approximately 250 new homes, and provide an $80 million regional maintenance program to 3,800 homes.

It has an immediate roll out, is funded into 2021, and is anticipated to support 2,600 jobs.

The Building Bonus grants, available from June 4 until December 31 2020, are to any home buyer who wants to build a new house or purchase a new property in a single-tier development (such as a townhouse) before completion of construction. The scheme is not means-tested and has no cap on the property value.

Urban Development Industry of Australia (WA) chief executive Tanya Steinbeck said the funding would stimulate civil construction work on new lots across the metropolitan area.  Master Builders Association of WA executive director John Gelavis said the government's package would make a big difference, and that without government assistance, the outlook for the sector was dire.


First HomeOwners Grants and Stamp Duty exemptions

Between the State and Federal schemes, and the existing $10,000 first homeowner grant, plus stamp duty concessions, some WA first-home buyers could qualify for benefits up to $69,440.

 

Value

Details


Means Tested?

 

WA Building Bonus Grant

$20,000

Paid to WA-based applicants who enter into a comprehensive home building contract to purchase a new home that is being constructed on vacant land between 4 June 2020 and 31 December 2020. 

Applicants must be the registered owner of the vacant land on which the home will be built.

No

Federal HomeBuilder

$25,000

Sign contracts to build or substantially renovate their home from June until the end of the year.

For new homes valued up to $750,000 including land, or renovations worth between $150,000 and $750,000 if the home is valued at no more than $1.5 million before the work begins.

The work must be done by a licensed builder, not an owner-builder.

Yes

 

Single Australians who earn up to $125,000 and couples who collectively earn up to $200,000 will be eligible for the scheme.

 

WA First HomeOwner Grant

$10,000

Applicants need to be 18 years or over at the time of making application.

At least one applicant must be an Australian citizen or a permanent resident at the time of making application. 

Applicants and/or their spouses or de facto partners cannot have previously received the grant or first home owner rate of duty from any jurisdiction in Australia owned residential property anywhere in Australia before 1 July 2000

owned residential property anywhere in Australia on or after 1 July 2000 and occupied that property as a place of residence before 1 July 2004 owned residential property anywhere in Australia on or after 1 July 2000 and occupied that property as a place of residence for a continuous period of at least six months that began on or after 1 July 2004.

You must occupy the home as your principal place of residence for a continuous period of at least six months commencing within 12 months of settlement if purchasing a home, or within 12 months from the date of completion if building a home.

The cap on the total value of the home and land varies depending on where the home is located.

South of the 26th parallel – value of land and building is up to $750,000. All Perth metropolitan areas are south of the 26th parallel.

North of the 26th parallel – value of land and building is up to $1,000,000.

No

First home owners concessional rate of stamp duty

No Stamp Duty for homes under $430,000 Discount for homes $430,001 and $530,00

The home purchased must be used as a primary place of residence.

Vacant land purchases are exempt from stamp duty for values up to $300,000. Concessions are available for land valued between $300,001 and $400,000.

No

We have set out below the main details and conditions to for the various first home owner grants and concessions.  This is not an exhaustive list, we recommend speaking to your Aspen Corporate Advisor for information about your personal situation.

CONTACT US

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PERTH WA 6000

PO BOX 8262
PERTH BUSINESS CENTRE
STIRLING ST
PERTH WA 6849
P +61 8 9228 0700
F +61 8 9228 0706
ADVISOR@ASPENCORP.COM.AU

 

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