It has been announced by the State Government that the $7000 First Home Owners Grant (FHOG) will change on 1st July 2013. The grant will be increased to $10,000 but the eligibility criteria also changes substantially. First home buyers are only eligible for this grant if they are purchasing a new home. Considering there are reliable statistics out in the public domain that approximately 70% of first home buyers buy established homes, then this will be a big savings for the State Government. FHOG is only available to those who purchase a property to the value of $750,000 or less.
The State Government will take $7000 away from 70% of first home buyers and give an extra $3000 to 30%. The other change for first home buyers does soften things a bit but not as much as you think. The reduction in stamp duty for first home buyers changes from a 30% reduction to a 40% reduction. This reduction is only available to those first home buyers who are not spending more than $600,000.
This is truly a smart move for the government. Currently the biggest saving an eligible first home owner can get would be the $7000 grant and then approximately $9321 if they are spending $600k on their first home. And in theory the savings would rise $3107 as the 40% savings kicks in. BUT, if you purchase a new home, quite often there are substantial stamp duty savings anyway, as you pay stamp duty only on the value of the land and improvements at the time of purchase not the finished product, but you do pay GST on the value of the building!!
There is an unseen benefit here. There is a small window of opportunity for those who are buying before June 30th and settling after June 30th. If the contract date is prior to June 30th then you will be eligible for the current FHOG of $7000 and if the purchase price is under $600k then the stamp duty reduction, assuming you settle on July 1st or after will be 40%. If you are considering purchasing a new home, then obviously it will be a lot smarter to wait until July 1st to sign a contract and then you get $3000 more for the FHOG.
If you would like some assistance to purchase your first home, please feel free to call our office, or make an appointment for a no obligation meeting
JPP Buyer Advocates