Join Australia's most dynamic and respected property investment community

HOW TO UTILISE QLD GREAT START GRANT for knockdown house

Discussion in 'General Property Chat' started by Sid gupta, 19th Jun, 2016.

  1. Sid gupta

    Sid gupta New Member

    Joined:
    16th Aug, 2015
    Posts:
    3
    Location:
    Brisbane
    Hello
    I own a property in Sunnybank which is purchased last year.
    house is in state of disrepair. ideally suited to knockdown and rebuild

    I own the property in a Trust with my mother. there are 2 other properties in there. To avoid land tax, I plan to transfer the property to my personal name at around 450k as a first home buyer (market appraisal)

    My question is
    1. as a first home buyer, my understanding is you can use the grant to build a new home
    2. if i have a builder quote me around 300k to build a simple but nice home, (so total value of house and land is under 750k), can i apply for the great start grant $15000.00 bonus
    3. or do you have to purchase a brand new house and land package to get the grant


    and to clarify, this is not just a tax reduction strategy ... I like sunnybank and if i build a new house, I plan on living in the house as my PPOR. however if i cant get the grant, MAYBE I THINK save the grant and transfer for a different future purchase... just repair the house and keep coughing up the land tax as sunnybank is a great area for long term capital growth
    .... not sure what to do


    Sid
     
    Last edited: 19th Jun, 2016
  2. MsAli

    MsAli Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,147
    Location:
    Sydney, Australia
    Wouldn't you need to pay stamp duty to move it to your name?? Or is the stamp duty waieved for first homes in QLD? Sounds like you will need tax advice for this one. Wonder how it's treated to own in a trust and then buying another im your own name as a first home buyer.
     
  3. Sid gupta

    Sid gupta New Member

    Joined:
    16th Aug, 2015
    Posts:
    3
    Location:
    Brisbane
    thanks for your reply
    NO stamp duty payable for transfers under 500k for a first home buyer in qld

    sid
     
    MsAli likes this.
  4. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,658
    Location:
    Sid en e - olympic city
    How can you be a first home owner when you already own it, or own property.

    First home owner grant is not a state thing, it is nation wide and you cannot have owned prior.

    Why would you even think this was ok either way when it is meant to help those with no money, not be a handout to those who already have money/property, you should not take it even if it was legal, which I doubt, just for the sake of own pride IMO.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,090
    Location:
    Melbourne, Nationwide
    Sid doesn't own the property, the trust does. It's perfectly legal to be a beneficiary of a trust that owns property and then to get the grant when you buy a property in your own name. I don't see any sort of ethics issue there either.

    That said, it is kind of redunant to have a property in a trust, then transfer it to your own name simply so you can take advantage of a $10k grant. You've already paid the stamp duty. You may not have to pay it again for the transfer, but you're giving up the opportunity to own another property and not pay stamp duty. You are giving something up for the sake of saving a bit of land tax.

    Is it viable to implement your plan purchasing another property in the area?
     
    Bender12 and Elives like this.
  6. melbournian

    melbournian Well-Known Member

    Joined:
    2nd Sep, 2015
    Posts:
    1,311
    Location:
    melbourne
    i have done something similar in victoria though i wasn't the first home owner but a relative of mine was. Had to get it valued by a few agents and send it for the SRO to confirm that it was a legitimate price. Gujus really know how to make their money go the furthest. :)
     
    ross100 likes this.
  7. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,658
    Location:
    Sid en e - olympic city
    While that may be a technical thing, he says he owns it, he also says there are others in there, to me this is the sort of shifty thing most people do not like, to then go for govt funds which would appear to be designed to help those at the start line, not a wanton hand out for those already established with interest in multiple properties - however that interest may be setup, so I see it as something many would/should not do.

    I would be very surprised if the grant was designed to help those established with multiple properties, I guess you would have to get on the phone to find that out, if your that way inclined.
     
  8. Elives

    Elives Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    529
    Location:
    Queensland
    are you the director / trustee or are you a beneficiary? i would have thought the grant would exclude a director / trustee which owns property haha
     
  9. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,090
    Location:
    Melbourne, Nationwide
    What Sid says and what he does are two different things. Unless Sid is the trustee (as opposed to using a company as the trustee), he doesn't own the properties in the trust. Terry recently wrote a post clearly explaining that you don't own the proprety in a trust.

    Furthermore, plenty of people have enjoyed the grant despite already owning multiple investment properties. The FHOG is their for your first home, not for your first property.

    A lot of people don't like negative gearing either. That doesn't mean that Labors proposal is good policy though.
     
  10. Sonamic

    Sonamic Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    935
    Location:
    Sunny QLD
    Just make sure you do it after July 1st. Qld Govt are adding a 5k boost to the Grant bringing it up to a 20k total on new builds for the next 12 months.
    Just took a young 19yo workmate to look at a small first home on the way home from work. 20k FHOG and no Stamps will get a lot of youngies into their first home. Provided it's new property of course that's "not been previously lived in". Not been previously lived in may be a solution to the unsold OTP apartment glut that's coming?
     
    Angel likes this.
  11. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,658
    Location:
    Sid en e - olympic city
    Legal eagles aside, I will go with what the "spirit" of such things is for.

    It may be legal for me to bully an old lady from her long term home as well, or various other things, but most would see it as not kosher, not what the rules/laws were designed to allow.

    I do not know the details of either grant, if you hold property that is a home, but choose to rent it out, then I would hope that would disqualify someone, but with the competence of some in power dreaming up such things, they probably do have holes allowing this kind of abuse.

    NG is not a handout, it is money that the govt does not get to collect/keep, but that aside, apart from the poor timing, NG should be looked at when making changes to systems, alas, NG is clearly available to everyone equally , so we may as well say Medicare is a handout if NG makes the same grade as a grant, NG and Medicare, as examples, are clearly meant for all to use, but you do not have to, a grant has narrow eligibility criteria, so I see them as different.

    It would be hard to argue that this FHOG is meant to help more than newcomers, it is a leg up, a little assistance, it is not for investors with multiple properties in trust/s who are trying to avoid as much tax as possible !

    PS a quick check of the website clearly says not owned property in *Australia* before, which was my prior understanding.

    First Home Owners' Grant

    And it goes on to say, even if you are eligible, there may be other things that prevent you getting the grant.

    Maybe the plenty of people have broken the law or taken a grant when they should not have, this would not surprise me, but a grant designed to be taken advantage of by investors with property in trust/s already, that would.
     
    Joynz likes this.
  12. Sonamic

    Sonamic Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    935
    Location:
    Sunny QLD
    I agree. FHOG should be for your FIRST HOME. The very first PROPERTY you buy should be what it is used for AND be made to live in for a minimum of 12 months. I also don't understand how people can go out and buy IP's but still Qualify for the FHOG because they've not lived in the IP's. OP obviously Qualifies on a technicality, has worked the system, found a loophole and will be 20k up. I'm jealous, I built my first home a couple of years after FHOG was introduced and just before I signed Contracts it dropped from 14k to a measly 7k for new builds. But house went up 70% in Val over the first 12 months in, so win some lose some.
     
    Joynz likes this.
  13. Angel

    Angel Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,269
    Location:
    Paradise, Brisbane
    Dabbler, you don't know whether our OP has one or several properties. You don't know any more about him than I do. For all we know, he could be some sad guy whose father died when he was younger, leaving him and his mother as the beneficiaries of a small trust with one house to live in and the other as a rental.
     
  14. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,658
    Location:
    Sid en e - olympic city
    Well, the OP said what they owned had an interest in, so I can only go off of that, but really, it is academic.

    I mean really ? your suggestion means we should not discuss anything, because we really do not know as verified what anyone claims here on the forum.

    BTW that does not stop me from taking my standpoint and having my input, we can discuss these things regardless of the OP position, whether falsified here (for what reason I do not know) or gospel truth, or some other.

    quote of the OP



    on the FHOG QLD page....

    lol...

    On one page for QLD says you are not eligible if you or spouse has owned any property, then on another page they have this....and people may note the word "interest" which should cover trusts I would guess.


    ====

    I have owned or currently own an investment property. Am I eligible for the grant on a subsequent property?
    If you held an interest in residential property before 1 July 2000, regardless of how the property was used, you will not be eligible for the grant.

    If you have held or currently hold an interest in residential property since 1 July 2000 and the property was or is used solely for investment purposes, you may be eligible for the grant on a subsequent property. You would need to give evidence showing you have not lived in the investment property.

    This evidence may include:

    • tenancy/lease agreements
    • current electricity/phone accounts
    • tax return details.
    We will review all documentation provided with the application. We will not make a determination without an application and supporting documentation.
     
  15. Angel

    Angel Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,269
    Location:
    Paradise, Brisbane
    it's OK I'm stirring a bit. I had no idea that one can get a grant if they have previously held an interest in any other property anyway. I actually agree with you that a person who already has some kind of ownership of another property should not get a FH grant.
     
    Joynz and wylie like this.
  16. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,090
    Location:
    Melbourne, Nationwide
    In my opinion within certain limits (price points), everyone should get the grant once, regardless of the property type. Why should one person not get the grant simply because they choose to invest rather than occupy? Investing doesn't automatically make you more wealthy (at least not at the point of the first purchase).

    Initially the grant was $5000 when introduced in 2000. You had to reside in the property but no time frame was noted and some people spent a single night there. There was also no means testing and very wealthy people were buying properties in their kids names to get the grant. Eventually a cap was put on the amount and occupancy criteria was increased.

    The argument was that the grant wasn't for the wealthy, it was a leg up. This however is inconsistent with restricting it to new properties only. The argument for this is economic; to support the building industry.

    You can't really argue that interest in a trust or company should be automatic disqualification either. Go buy a few shares in a company as a way of building your first deposit. What if that company owns property?

    There's still multi millionaires buying property and receiving the grant, it's not feasible to means test it. There's still people with access to trusts getting the grant. It's the sort of thing that it so easy to exploit that it can never be fair.

    The easiest way to make it fair is that everyone gets access to it the first time they purchase a property in their name. Everybody gets a leg up for any property below a certain price point.
     
  17. Sid gupta

    Sid gupta New Member

    Joined:
    16th Aug, 2015
    Posts:
    3
    Location:
    Brisbane
    Thanks a lot peter Terseeg. That REALLY makes sense - it may well be a lot of hassle to save a measly 10k in land tax and I CAN SAVE THE STAMP DUTY CONCESSION AND FHOG for a different asset.

    however currently i was facing a huge bill as I have a development site and another property in the same trust. poor planning on the outset on my part :(

    will discuss with my CA.

    Dabblers comments are fair but I think his suggestions of "shifty" behaviour to me are a little unnecessary.

    Like a lot of migrants (and "aussies" for that matter), there is nothing wrong with family members structuring their affairs to minimise their tax liability. Vast swathes of govt expenditure in this country is wasted and recycled back into / exploited by private businesses anyway (as a health practitioner and business owner I know)

    You can own multiple properties for investment but if this is the first time i will be living on my own in my PPOR, i see no reason why i should be discriminated against getting a grant. the FHOG is more to help the economy and create construction jobs (one of the best economic multipliers we have along with infrastructure spending), as well as to support the banks, the tax base and potentially overleveraged developers etc as much as it is based on your leftish romantic notions about it being something done purely for the sake of the "poor"
     
    Last edited: 21st Jun, 2016
    jprops likes this.
  18. jprops

    jprops Well-Known Member

    Joined:
    24th Sep, 2015
    Posts:
    108
    Location:
    Sydney
    That's a bit dramatic. As far as I know there is no asset to test for the grant. You could also have a million dollars in shares and have never bought your first home - you'd still be eligible. Why is this any different?
     
  19. dabbler

    dabbler Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,658
    Location:
    Sid en e - olympic city
    I did not reply the other day, it is tested or has criteria, and same thing, if you have a million in shares, then if you think it was designed for those people, then your thinking is diff to mine. But at least you have no houses you own through whatever setup.

    Just because you can take something, does not mean you should, this guy won't get it I believe even if he does apply. He has multiple houses he says are his, hardly a first home owner ! Also in own healthcare business.

    Go for it if your morals and pride do not prevent it.

    Also, why can't we all get it then for one place if it is just a handout for all, maybe a question for the self, or a call to ask what the grant is aimed at. Clearly I do not think millionaires or property investors should get it :)

    I am waiting for the hoards to join in and say yes...you should grab it & yes, we have done so too as investors......but silence...maybe a clue...;)
     
  20. neK

    neK Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,253
    Location:
    Sydney
    @dabbler i agree with your views about the purpose of the FHOG. However in this specific case I think it's slightly different. He owns the property in a trust, which to me implies he's already paid the stamp duty.

    So if he's using the FHOG to avoid paying stamp duty the 2nd time that's fair enough really. Not too different to a husband wife situation where they are trying to transfer the property into joint names and want to avoid paying stamp duty the 2nd time around.