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First Home Owner Grant (FHOG) Guide

first home owner

First Home Owner Grant (FHOG) Guide

The prospect of purchasing a first home is on the horizon for our next generation. Home loans are harder than ever to secure with many young people left struggling to build deposits and with the current interest rate environment unwinding back to what is has been traditionally, no doubt many younger adults will be stressing about making their repayments. The government is certainly aware of the struggles many younger people have in building a deposit and have introduced the first home owners grant many years ago to assist with allowing the next generation to enter the housing market in Australia.

Despite the challenges, parents and grandparents can participate in the ensuring the next generation are financially secure through gifting deposits on mortgages or assisting with repayments while wage levels increase through trainee or graduate programs into full time work.

The team of financial planners at Forrest Private Wealth are here to help and have put together a handy guide below for First Home Owner Grant (FHOG).

 

What is the First Home Owner Grant?

The First Home Owners Grant is a grant provided by the government that assists eligible first home buyers financially with a one-off payment ranging from $10,000 to $20,000. The specific payment amounts are dependent on the state or territory the home is bought. The grant allows eligible buyers to purchase a new or existing home with a deposit of as little as 5%.

The FHOG scheme was initially introduced in early 2000 with the inceptive purpose of offsetting the GST on home ownership. As property prices have progressively increased over time, the grant is seen as a great way for first-time purchasers to enter the property market.

 

Who is eligible for the First Home Owner Grant?

Due to the differences in legislation and eligibility rules, FHOG varies from state to state. All states and territories around Australia generally follow these standard eligibility rules:

  • Must be 18 years old or older
  • It is the first time you are claiming the grant
  • The first home buyer is a person, not a company or trust
  • Must be an Australian resident or permanent resident
  • The buyer cannot have lived in a property that they have owned since July 2000.
  • The purchaser must occupy the home as a principal residence within 12 months of purchasing or constructing the home and must occupy the house for 12 continuous months.

To find the specific First Home Owner Grant eligibility that applies to your state or territory, visit: HERE

 

Are there any disadvantages of the First Home Owners Grant?

Property grants such as the FHOG increase demand in the property market. This leads to an increase in the price of property across the country. Although grants may influence the market, it is still an effective way to help those Australians in need.

Some states and territories cap the value of eligible houses. This restricts the selection of potential homes, leaving first-home buyers with a home they do not like.

Income thresholds may apply in certain states or territories meaning not every first-home buyer is eligible for the loan.

 

First Home Owner Grant – Stamp duty by state/ territory

 

How do you apply for the First Home Owners Grant?

Two ways of lodging a FHOG application:

  1. Lodge an application through the state or territory’s revenue office
  2. Lodge an application through an approved agent (lender)

 

4 main steps must be taken when applying for the FHOG:

  1. Check your eligibility
  • A person cannot apply for the grant if they do not meet the eligibility requirements

 

  1. Gather your supporting evidence (proof of identity)
  • Proof of identity can include the:
    • An Australian driver’s licence
    • A passport
    • Australian citizenship certificate
    • Medicare card

 

  1. Complete the application
  • Applicants are not required to complete this stage if they are applying through an approved agent
  • Other applicants can complete an online form at their state or territories revenue office. For more information, on the First Home Owner Grant CLICK HERE

 

  1. Lodge your application
  • Approved agents lodge applications for their clients
  • Applications must be lodged within 12 months of the completion of construction, or the settlement date of the given home.

 

Talk to a Financial Planner at Forrest Private Wealth, or your accountant, to learn more on this topic

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