First home—New Home Scheme
The First Home—New Home scheme commenced from 1 January 2012 and provides eligible purchasers with exemptions from transfer duty on new homes valued up to $550,000 and concessions for new homes valued between $550,000 and $650,000.
Notice: This new policy also applies to preowned house. But the preowned house transaction is not qualified for the first home owner grant scheme.
First Home Owner Grant (New Homes) scheme
From 1 July 2017, the First Home Owner Grant Cap for new home purchases is $600,000; for a property where you enter into a contract to build, or are an owner builder the total value cannot exceed $750,000. For these eligible transactions made on or after 1 January 2016, the grant amount is $10,000.
It is introduced to stimulate the construction of new homes. However, there is almost no land within 40 km from the city. If the buyer wants to get the grant, the only choice is in the Northwest Sydney.
New home grant scheme
People always confused New Home grant scheme and First Home New Home Scheme. But these are different thing. The New Home Grant Scheme provided a grant of $5,000 every financial year but it requires the value of the new home must not exceed $650,000 and the value of vacant land must not exceed $450,000. However, the New Home Grant scheme ceased on 30 June 2017.
The transfer duty liability will not be allowed to deferral.
From 1 July 2017, all residential purchases by investors are excluded from the 12 month off the plan transfer duty liability deferral.
Purchasers who wish to obtain the deferral need to declare an intention to occupy the property as their principal place of residence (PPR).
If a purchaser claims an entitlement to the deferral, but the land is not occupied as the purchaser’s PPR for a continuous period of 6 months, commencing no later than 12 months after completion of the sale or transfer, interest and penalty tax may apply from the liability date.
Insurance duty on lender’s mortgage insurance abolished
80% loan ratio is a common sense of people who have the mortgage experience. However, the maximum loan ration is 97%, but the clients should pay another Lending Mortgage Insurance (LMI). LMI is the insurance companies like QBE and Genworth charge the risk management fees which would increase with the loan ratio increasing. Besides the insurance, there is another compulsory insurance tax. However, people only need to pay the insurance but no insurance tax.
Conclusion by VIP Mortgage Solutions
In a nutshell, government encourages first home buyer could afford the residential property and control the prices of property. So the government introduce a series of policies including First Home Super Saver Scheme and FHOG $10,000 grant. These policies help the first home buyer get into the market and there will be a policy to increase the property supply including simplify the approval process of DA, speed up the construction of infrastructure, and assist local council update Local Environment Plants in order to increase the supply of property land.