Earlier this month, the Federal Government announced they’ll give eligible Australians $25,000 to build (or substantially renovate) a home, as part of the HomeBuilder scheme. Here we examine who qualifies for the initiative and provide a little more detail about how it may work.
The HomeBuilder scheme is a $680 million program and aims to support more than 1 million builders, painters, plumbers and electricians across the country.
It’s also going to help many Australians build a new home (or finally start those reno’s they’ve been planning), as the $25,000 grants are non-taxable and are available in addition to existing state and territory first home owner grant programs, stamp duty concessions and other federal schemes.
Let’s see who’s eligible for the HomeBuilder scheme….
HomeBuilder Eligibility
To access HomeBuilder, owner-occupiers must:
- be an individual (not a company or trust);
- be aged 18 years or older;
- be an Australian citizen; and
- have an income of less than $125,000 per annum for an individual applicant, or $200,000 for a couple – income caps are assessed against your taxable income and “based on your 2018/19 Australian tax return (or 2019-20)”
- enter into a building contract between 4 June 2020 and 31 December 2020 to either:
- build a new home as a principal place of residence valued up to $750,000 (including land); or
- substantially renovate your existing home as a principal place of residence. Renovations must be valued between $150,000 and $750,000 and the value of your existing property must not exceed $1.5 million before the renovation.
Construction must also be contracted to commence within three months of the contract date.
Other eligibility details
Houses, apartments, house and land packages and off-the-plan dwellings – are all eligible.
HomeBuilder cannot be used for additions unconnected to the principal place of residence. So, forget about any ideas you had to use the $25K to add a swimming pool, tennis court, or turn your detached shed/garage into the ultimate man/woman cave.
Also important to note: HomeBuilder is not available for investment properties or to owner-builders.
Vacant Land
If you own vacant land before 4 June 2020 and then build, the total value of the land and new build cannot exceed $750,000.
If you buy land after 4 June 2020, and then build, the total value of the land and build cannot exceed $750,000.
Off-the-plan purchases
If you sign the contract to buy an off-the-plan dwelling on or after 4 June 2020 and on or before 31 December 2020 AND construction commences on or after 4 June 2020 (but no later than three months after the contract is signed then), the property purchase may be eligible for HomeBuilder. The states may add provisions for cases where construction is delayed due to unforeseen factors outside the control of the parties, but we’ll find out more about this in due course.
However, if you sign the contract to buy the dwelling after 4 June 2020, and construction on the property commenced before 4 June 2020, then the home does not qualify for HomeBuilder.
The timing of the HomeBuilder payment
As of 18 June, Treasury has released more information in regards to the timing of the $25,000 payment.
“For new builds, grants will be paid in line with the timing of payments for first home owner grants or at the discretion of your State and Territory if there is no first home owner grant schemes in place. For substantial renovations, grants will be
paid once at least $150,000 of the contract price has been paid in respect of the renovation.“It is expected that, where possible, states and territories will align the HomeBuilder application processes with existing processes for first home owner grants (or similar),” Treasury states.
We expect to receive further information from various state and territory revenue offices to outline the final details of how to apply for these grants, and confirm timing of the payments.
Some of the finer points
Specific details as to how each State and Territory will administer HomeBuilder are slowly being revealed, but here’s what we know so far:
The $25,000 grant will be paid directly to the applicant (not the builder or contractor).
All building work must be undertaken by a registered or licenced building service contractor.
To help protect against inflated quotes and pricings, the registered or licensed builder must be able to demonstrate that the contract price for the new build or renovation is no higher than the cost of comparable works done back in July 2019.
If you’re interested in reading a few case studies, please find the Treasury HomeBuilder factsheet here.
Reach out to us
That just about covers the scheme’s eligibility details. The next step is to work out how to finance your project.
That’s where we can help!
If you’d like some help obtaining the finance to build your new home (or finally undertake the renovations you’ve been dreaming about), get in touch with us today.
Leave your contact details here and our team will be in touch with you shortly.
P.S If you want to know more about construction finance and the ins and outs of building a home, you can find more information here:
