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First home buyers grant and investing?

Discussion in 'General Property Chat' started by Semaj, 3rd Aug, 2016.

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  1. Semaj

    Semaj New Member

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    Question in regards to FHBG. My current circumstances are that I'm single individual renting and have one investment property. Wondering for the next property whether to use FHBG to purchase property as principal place of residence and live in it for 6 months whilst renting a few rooms out while I'm living there then turn into investment property or wait bit longer to save deposit and purchase a second investment property? Is there any benefits to utilizing the FHBG? If it's not used now down the track would this not be available due to having accumulated numerous investment properties?
     
  2. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    The rules vary from state to state but in WA you can have IPs and still qualify for FHOG as long as you have not lived in them or ever owned an OO in the past.

    7k FHOG got me into my first property back in July 2000. It paid for everything including the deposit. Putchase price was 55k :)

    I would use it as it may disapear and not come back.
     
  3. dabbler

    dabbler Well-Known Member

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    I would say to you, if you have an IP already, do not take the grant as is meant to help people into "first home", it is not free money you should just take advantage of.

    Only a few decades ago Aussies were too proud to take money like this unless it was really needed, it is a good philosophy for a healthy society IMO. Do your own thing and be proud to do so, set a good example if you can.

    If everyone just takes everything they can, Australia will be stuffed in a few more decades.
     
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  4. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    @dabbler I see it as a very small rebate on all the taxes they charge me.
     
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  5. jprops

    jprops Well-Known Member

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    You've made that point before, but I disagree. The intention of the grant is spelled out by the eligibility requirements. If you are eligible, there should be no moral qualm with accepting it.
     
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  6. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hiya

    The obvious benefit is the cash incentive.

    Keep in mind though that most state govts. only make it available for new builds - it's an incentive to stimulate this industry.

    If the state you plan on purchasing only makes it applicable to new dwellings - then you need to question whether or not it's going to make for a good long term investment.

    Cheers

    Jamie
     
  7. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    @Semaj

    This is front the State Revenue Office website Apply for the First Home Owner Grant (FHOG) | State Revenue Office

    "You are not entitled to the FHOG if you (or your spouse/partner) have previously:

    • Received a first-home owner grant in Australia,
    • Owned a home in Australia, either jointly or separately, prior to 1 July 2000,
    • Occupied, for a continuous period of at least six months, a home in which either of you acquired a relevant interest on or after 1 July 2000 in Australia"
     
  8. mcored

    mcored Active Member

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    Depending on how much you get from the FHOG, if you rent your property, that would be $400 x 4 x 6 = $9600 plus tax benefits, at least. Point is that sometimes FHOG isn't the best way to get a better return.
     
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  9. Semaj

    Semaj New Member

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    Thanks for your comments. I'm new to investing and just weighing up my options at this stage. If i was to use the FHBG it would be in Queensland which is currently $20 000 and new property is what I am after anyway to claim higher depreciation and reduce taxable income. Not sure for PPOR live in for 6 months or rental property which would have associated tax benefits. It might get the ball rolling faster with PPOR rather than waiting to try and save deposit for rental property?
     
  10. ej89

    ej89 Well-Known Member

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    that's the basic definition, but there's more details in there...if you have never lived in a property you own you can claim the FHOG...
     
  11. ej89

    ej89 Well-Known Member

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    How much do you pay in rent atm? where are you looking to invest and what rental return will it get?
    e.g.
    if you currently rent $300/week that's $7800 you're spending on 6 months rent..
    if you rent your property out for $450/week that's $11,700 you'll make..
    $11,700- $7,800= $3900 in your pocket...which is $150/week.

    now if you live in your house as a PPOR, you'll receive 20k, which means you pocket $769.23/week obviously before paying your mortgage, so less say that's 400/week, you're up $369/week.. avoiding FHOG is only useful if you're living at home, you pay no rent, and your rental return is like $650/week... don't forget you get the benefits of CGT exemption for 6 yrs...

    Clear winner here on simple numbers is take the grant if you're buying new.. unless of course you plan to buy again within that 6 months, your borrowing capacity will be shot by the fact that you're living in your house..
     
  12. dabbler

    dabbler Well-Known Member

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    I think there is nothing wrong with making people think. Nothing wrong with encouraging people to be proud, and nothing wrong with taking grant if it is needed and you qualify.

    My main point is if you have been investing and have ample funds/income, then do not take govt handouts of any kind.

    Just because you can do something, does not always make it right.

    This may or may not apply to this person :)
     
  13. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Thats correct as I have done FHOGs for people with IPs that they never lived in.
     
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  14. jprops

    jprops Well-Known Member

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    So
    So you agree that someone who only owns an IP should not be precluded from the FHOG then?
     
  15. citystar

    citystar Well-Known Member

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    When I was first starting out I couldn't afford much in the way of a house on a block of land so I used the FHOG and Stamp Duty exemption/discount in QLD at the time to purchase my first property. I lived there for the appropriate amount of time before renting it out. I made sure to setup the loan from the beginning as Interest Only with a 100% offset account. While I lived there to satisfy the FHOG/Stamp Duty concessions, I painted the whole place over several weekends, ripped up the carpet and tiles to prepare the floor for professionals to recarpet/tile the property, thus adding value and increasing the rent I would be able to achieve once moving out.
     
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  16. dabbler

    dabbler Well-Known Member

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    No, no way, I do not get anywhere near agreeing to this at all.

    If someone can afford a property that is a "home" for them, but choose to rent it out too others, then they have used, in my opinion, any grant that is meant for "first home owners", they already bloodywell own/owned one !!!

    The grant should be for housing assistance for those that need the help, not investment property assistance and options down the track when they decide to move out from mummy or wherever.

    Then you have my other point, which is you should run your own show and be proud to do so if possible, this is a healthy outlook, as opposed to grab whatever I can, just because I can. I think we are losing this mindset, which is what attracted so many people to AU & clearly our government cannot afford such handouts.

    The only argument for, is, self interest, or technical qualification -- that is it, this is not a healthy philosophy nor practice, regardless, for those not in real need.
     
  17. Semaj

    Semaj New Member

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    Currently 28 been living out of home since 18 and have never lived in or had the luxury of owning my own property as i have always rented other peoples homes supporting their investments i am entitled to FHBG just like anyone else.
    @ej89 those figures make sense thanks. looking to invest around goldcoast region with rental return of possibly 450..
     
  18. dabbler

    dabbler Well-Known Member

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    Either you have a poor memory, or are posting nonsense, either at the start or now. For you to know the exact truth I guess.

    If you own an investment property and rent it out by choice, that is a home as far as I am concerned.

    You may be entitled, and that is exactly what I am talking about, the entitled mentality that seems out for all they can grab, rather than doing your own thing and taking a certain pride in this.

    At least these threads alerted me to something I thought would be impossible.

    No wonder the country is going down the toilet if this is becoming the norm.
     
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  19. jprops

    jprops Well-Known Member

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    My main point is you can own an investment property and not have ample funds/income.

    I think what you are after is some sort of asset and/or income test for eligibility and I wouldn't be against that.

    I don't see owning an investment property as any different to other kinds of investment and doesn't make you rich. Many people decide to rentvest these days because they can't afford to OO. I don't think they should be precluded simply because they have owned an IP, as that doesn't tell the whole story.
     
  20. Cactus

    Cactus Well-Known Member

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    Don't forget thought that the investment property may be providing housing assistance to somebody else.

    Also should someone that has previously owned shares/bonds/term deposit or any other form of investment be entitled to a grant to get into housing?

    Taxes on property are very high especially new housing where things like GAIC DCP GST multiple levels of Stamp Duty and Land Tax etc have all been paid. The govt is just giving people a chance to enter with slightly less tax as a once off.