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Two new Initiatives for Victorian First Home Buyers

The State Government of Victoria has recently announced a range of new initiatives for first homebuyers.

These changes come into effect 1 July 2017 and include the following:

  1. The removal of stamp duty for homes – both new and established – under $600,000; young-couple-dream
  2. Scaled stamp duty reductions for homes – both new and established – between $600,000 -$750,000;
  3. Doubling of the First Home Owners Grant – from $10,000 to $20,000 – for new homes in regional Victoria under $750,000; and
  4. Changes to off-the-plan stamp duty concessions – these will now only apply to those who qualify for PPR or first homebuyer concessions.

In addition, the Government has announced a vacant residential property tax for vacant homes in Melbourne’s inner and middle rings, effective 1 January 2018.

Abolishing stamp duty for first home buyers

From 1 July 2017, first home buyers purchasing properties valued below $600,000 will be exempt from paying stamp duty.

Further, first home purchases valued between $600,000 and $750,000 will receive a concession applied on a sliding scale.

It will be available for new and established home purchases.

This initiative gives first home buyers across the state a helping hand, by substantially reducing the upfront cost of purchasing a home.

How will it work?

The exemption and concession are available for new and established home purchases and will be applicable to contracts signed from 1 July 2017.

What are the criteria to qualify for an exemption or concession?

  • The home must have a dutiable amount of less than $600,000 to receive a stamp duty exemption. economy property market grow wealth house dream first home
  • A concession applies on a sliding scale for purchases with a dutiable amount between $600,000 and $750,000.
  • The dutiable amount of a property is generally the greater of the purchase price or market value, minus any deductions (such as a deduction for an off-the-plan the purchase)
  • The purchaser and the purchaser’s partner must be first home buyers, consistent with the definition under the First Home Owner Grant Act 2000.
  • The purchaser must be an Australian citizen or permanent resident (New Zealanders holding a special category visa are considered permanent residents if they are in Australia at the time of settlement).
  • The purchased property must be used as the purchaser’s principal place of residence for  a continuous period of 12 months, commencing within 12 months of possession of the purchased property.

Double the First Home Owner Grant for regional Victoria

For contracts signed between 1 July 2017 and 30 June 2020, the First Home Owner Grant (FHOG) for regional new home purchases will double to $20,000.

The increase will help first home buyers to purchase in their local community and will help support construction and employment.

How will it work?First home buyer

FHOG is currently a $10,000 grant for first home buyers that purchase new homes throughout Victoria.

This initiative increases the FHOG to $20,000 for regional new home purchases.

First home buyers of new homes in metropolitan Melbourne will continue to receive the $10,000 FHOG.

As with the current arrangements, the FHOG will only be available to purchases valued up to $750,000.

The increased FHOG will be applicable to contracts signed from 1 July 2017 to 30 June 2020, at which time,
the Government will assess the impact of the policy on first home buyers and construction in regional area.

Who will qualify?

  • The increased FHOG will be available for regional first home buyer purchasers of new homes valued up to $750,000. bag money coin deposit saving save house property tax
  • The purchaser and the purchaser’s partner must be first home buyers, consistent with the definition under the First Home Owner Grant Act 2000.
  • The purchased property must be used as the purchaser(s)’s primary place of residence for a continuous period of 12 months, commencing within 12 months of possession of the purchased property.
  • Prospective first home buyers can contact the State Revenue Office on 13 21 61 to find out more about their eligibility.
  • For a list of regional local councils involved please click here

Rebalancing the off the plan stamp duty concession

From 1 July 2017, the off the plan stamp duty concession will only be available for those who qualify for the principal place of residence stamp duty concession or the first home buyer stamp duty
exemption/concession.

The concession will no longer be available for other purchases, such as residential investment properties and commercial properties.

This gives owner-occupiers a competitive advantage against investors, and aligns with the Government’s goal of supporting first home buyers.

The Government is using the savings from this initiative to fund the changes to stamp duty for first home buyers.

The REIV comments as follows:

Buying your own home is the Great Australian Dream.

But for some, especially first home buyers, younger and lower income households, that’s getting harder. first home

Many potential home owners are being locked out of the market by growing competition and the upfront costs associated with purchasing a home – the need for a deposit, stamp duty payments and other fees.

This means owning a home is increasingly becoming a distant dream for many Victorians.

Recent data shows the problem is growing.

Median house prices in Melbourne have risen by over 40% since 2012.

Metropolitan Melbourne house prices have risen to $610,000 and unit prices to $490,000 for the June Quarter 2016.

Melbourne continues to have the highest home prices after Sydney.

From 2005 to 2015, the median sale price of housing across regional Victoria increased 49%, from $206,000 to $307,500.

At the same time unit prices in regional Victoria rose 32%, from $190,000 to $251,000.

These increases are having a real impact on the ability of Victorians to buy a home.Melbourne property skyline

From 1994-95 to 2013-14, home ownership rates dropped from 76% to 69% of Victorian households.

The price growth is having the biggest impact on our young, with the decline in home ownership rates steepest among Victorians aged 25 to 34.

It’s not surprising, given that first home buyers are also competing with those buying investment properties.

The Commonwealth Government’s tax policies make it even harder, with negative gearing and capital gains tax rules benefiting investors over home buyers.

Homes for Victorians aims to shift some of the balance back to first home buyers.

Source: REIV



Want more of this type of information?


Kate Forbes

About

Kate Forbes is a National Director Property Strategy at Metropole. She has 15 years of investment experience in financial markets in two continents, is qualified in multiple disciplines and is also a chartered financial analyst (CFA).
Visit www.MelbourneBuyersAgent.com.au


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