Buying a home in Australia is a step many people will go through. So what grants and exemptions are available to first home buyers? Today, using New South Wales as an example, we share the assistance that the Australian Government and the NSW Government provide to eligible first home buyers, along with the relevant considerations.

1. First Home Owner (New Homes) Grant

For eligible first home buyers in NSW — that is, people buying or building their first new home in NSW — a First Home Owner Grant (FHOG) of AUD 10,000 is available. Your first new home can be a newly built, purchased off the plan, or substantially renovated house, townhouse, apartment, unit or similar.

First home buyers can apply for this grant when purchasing the property. The bank or financial institution providing your loan must be an approved agent.

What are the eligibility requirements for the First Home Owner Grant?

– If you are purchasing a newly built house, townhouse, apartment, unit or similar, the purchase price must not exceed AUD 600,000.

– If you are buying vacant land and entering into a building contract with a builder, the value of the vacant land, plus the value of the comprehensive home building contract, plus the cost of any building variations, added together must not exceed AUD 750,000.

– If the home you are buying has been substantially renovated by the seller, the purchase price must not exceed AUD 600,000.

In addition, you may be eligible for the grant in the following circumstances:

1. Most of the home was removed or replaced.

2. The seller, builder or tenant did not live in the home before, during or after the renovation.

3. This is the first sale of the home since the renovation was completed.

This means that if the home builder has lived in, rented out, or used the property for short-term accommodation, the first sale of the property will not be considered a new home.

When are you ineligible for the First Home Owner Grant?

You or your spouse will be ineligible for the First Home Owner Grant if any of the following apply:

– You have previously received a First Home Owner Grant in Australia.

– Before 1 July 2000, you jointly or individually owned a home or other residential property in Australia.

– On or after 1 July 2000, you lived continuously for six months or more in a home in Australia that you owned (in whole or in part).

However, you or your spouse may still be eligible for the First Home Owner Grant in the following circumstances:

– You purchased residential property after 1 July 2000 and have not lived in it continuously for more than six months.

Watch out for the “six months of continuous residence” requirement to avoid penalties

If, after receiving the grant, your circumstances change and you are unable to move into the home and live there continuously for six months within 12 months of settlement, you must repay the grant. Otherwise, you may face a penalty of up to AUD 11,000.

If you live continuously in your home for six months, you can keep the grant. But if you move out before then, you will need to repay it.

Therefore, we recommend that first home buyers either move in and live continuously for six months immediately after settlement, or pick a date within 12 months of settlement to begin six months of continuous residence — at the latest, you must move into your first home within the final day of the 12th month and live there continuously for six months.

In addition, first home buyers should not submit any false information, as NSW authorities regularly review First Home Owner Grant applications for inaccuracies and cross-check your information against data from other government agencies and businesses. If you provide false or misleading information, you may face substantial penalties.

2. First Home Buyer Assistance Scheme (FHBAS) — Stamp Duty Exemption

The NSW Government announced that from 1 August 2020, the thresholds for buying new homes and vacant land to build new homes were raised. First home buyers may be eligible to apply for a stamp duty exemption or concession under the First Home Buyer Assistance Scheme (FHBAS).

1. For homes or vacant land purchased between 1 July 2017 and 31 July 2020, you may apply for a full exemption if:

– The value of your new or existing home is below AUD 650,000.

You may apply for a concession if:

– The value of your new or existing home is between AUD 650,000 and AUD 800,000, or

– The value of your land is between AUD 350,000 and AUD 450,000.

2. If you purchase a home or vacant land between 1 August 2020 and 31 July 2021, you may apply for a full exemption if:

– The value of your new home is below AUD 800,000, or

– The value of your existing home is below AUD 650,000.

You may apply for a concession if:

– The value of your new home is between AUD 800,000 and AUD 1 million, or

– The value of your existing home is between AUD 650,000 and AUD 800,000, or

– The value of your land is between AUD 400,000 and AUD 500,000.

You must also meet the following conditions:

– You must be an individual (not a company or trust).

– You must be 18 years of age or older.

– You, or at least one of the people buying with you, must be an Australian citizen or permanent resident.

– Neither you nor your spouse can have previously:

Owned or jointly owned residential property in Australia.

Received an exemption or concession under the First Home Buyer Assistance Scheme (FHBAS).

Final thoughts

First home buyers in NSW who meet the eligibility requirements can apply for the First Home Owner Grant and for a full exemption or concession on stamp duty. However, you need to confirm that the property you are buying and your other specific circumstances meet the requirements — especially for the First Home Owner Grant, where you must pay attention to the “six months of continuous residence” rule to avoid substantial penalties. If you have any questions about the application or your eligibility, we recommend seeking advice from a qualified lawyer.