The First Home Owner Grant (abbreviated to FHOG) was introduced in 2000 as an incentive for people looking to purchase their first home. Although it was increased to the substantial amount of $14,000 during the global financial crisis as a way to encourage more people to enter the flat market, the grant has now settled at a still generous $7000. While it is a national scheme, it is funded and administered by the individual states and territories.
How Can The FHOG Help Me?
If you are buying your first property and intend to make it a property investment, or are considering buying a home to live in, the FHOG can help towards covering some of the costs with a one-off tax-free payment of $7,000. The grant is not means tested, meaning that it does not matter how much personal income you make. There are, however, a number of rules that can restrict your eligibility for the grant, including:
- You cannot already own property in Australia, and cannot have claimed the grant previously
- You must be 18 years old or over and be an Australian citizen or a permanent resident
- You must plan on purchasing a property as a person, not a company or trust
- The property you buy must be within Australia and must be able to be used as a home
There are two other important points to note, which often get overlooked by first time buyers. Firstly, the grant can only be claimed per contract, not per person, and if your partner or spouse has already claimed the grant then you will not be able to do so again. Secondly, you must live in the property for at least 6 months starting at some point during the first year after you bought it. If it is a new building then one person from the application must live in the property for at least 6 months at some point during the 12 months after it was completed. For anyone looking at getting into property investment this is a crucial point as it means you will not be able to count on rental income during this period of time.
Because each state and territory also offers a range of other incentives such as stamp or transfer duty subsidies and extra grants for new homes, it is important to get the right information for you when determining your property investment costs when you’re first starting out. In Victoria, for example, you may be eligible to receive the $7,000 grant, however it will not apply for properties that are valued over $750,000. In South Australia, the property must be valued at under $575,000 to be eligible for the FHOG, however you may also receive up to $8,000 if you decide to purchase or build a brand new home. You can find out more information on each state and territories’ individual rules and requirements online or contact your mortgage broker, bank or other lender for assistance.