First Home Owner Grant - flip to IP after 12 months

What your thoughts/experiences in using the first home owner grant to buy a house and land package to live in for the specified 12 months and then rent out as an IP thereafter?

I know that the $15k grant is basically going into the developers pocket for new builds, but if you turn it into an IP after 12 months and gain all of the depreciation of a new home, I am thinking it might be worth it?

 

Short answer - no, not in itself.

 

Ah the first home buyers grant.

End of the day the deal has to stack up on its own merits. Work out your end goal first, then follow the numbers.

FHB grant, depreciation, that is icing on the cake. If the cake is bad, icing doesn't help

I can totally imagine you racking your brain trying to make the deal work out. That was me 5 years ago.

Hearing stories of friends getting the grant and pretending to live there whilst renting it out illegally.

My personal experience was the FHB was more of a hinderance. I wasted time focusing on not 'loosing' the grant rather than looking at profitable deals.

Take your time, learn to crunch the numbers. Don't expect to get it right straight off the bat. I cocked up every deal, yet every deal got better and better.

Get the fundamentals right, the as you get more comfortable you can start stacking strategies to make significantly more profitable deals.

 

Im in this boat. Having been tossing up ideas for when the time comes. Would like to hear more opinions on. I guess utilising the FHBG would really limit you in terms of location, since you have to live in the house. Some say its worth considering giving up the FHBG, and getting into a better market without the grant.

 

I was in this boat recently too. However I chose to buy an existing IP over using the FHOG. My understanding of it is, I might lose out on the first home stamp duty concession (but still benefit from the home concession in the future), however I wouldn't lose the FHOG in QLD, as long as I do not live in the IP before I buy/build a new house.

 

My brother was in the same boat 1.5yrs ago.
After crunching the numbers, he was heaps better off buying a '2nd hand house' and renting it out straight away.
- He didn't overpay for it in developers rates
- its value has gone up significantly since purchase
- he's much better off in cashflow from renting it straight away, as opposed to taking the FHOD and living in it.

Do the numbers and see whatbworks best for you

 

I thought about this a lot, $15k (new build only) ain't something to laugh at. But, it was brought in to compensate people for the new GST on residential housing. Developers make their profit on a build and then there's GST on top of that. Comparing new to existing, I can get a lot more house buying existing. I also like being able to see what I'm buying!