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Add this to your property strategy! Government Housing Assistance🏠

With property investment, strategic moves can make all the difference. I wanted to share some insights with you on how government assistance can be a game-changer in this landscape.

When you’re playing the property game, there are various cards you can play to help you win. A few of these cards come in the form of assistance from the government. Let’s take a look at each of these in more detail.

I believe these insights could significantly impact your property investment strategies.

FHOG explained! Your guide to the First Home Owners Grant

The first card you can play in the game of property investment is the First Home Owners Grant which is available to every Australian to use once. The FHOG is a national scheme funded by the federal government and administered by each state and territory under its own legislation. This means that the eligibility requirements and the grant value vary from state to state.

At the time of writing, the FHOG is valued at $10,000 in New South Wales, Northern Territory, Victoria and Western Australia, $15,000 South Australia, $30,000 in Tasmania and in Queensland it has recently doubled to $30,000. Visit the first home owners website for more information on the FHOG for your state: http://www.firsthome.gov.au.

The FHOG can only be used towards a brand new property which is defined as a dwelling that has not previously been occupied as a place of residence or sold as a place of residence. In certain, very limited circumstances, a substantially renovated property may qualify.

Previously, you could only use the FHOG if the first property you bought was your own home. However, this got challenged by people who couldn’t afford to buy in their current city but could afford to buy an investment property elsewhere. Now you’re able to purchase an investment property first and only play your FHOG card when you’re ready to purchase your first home that will be your primary residence.

The eligibility criteria for the FHOG are as follows:

A property cannot be more than the stipulated value. At the time of writing, properties eligible for the FHOG were up to $800,000 in NSW, $750,000 in QLD, VIC and WA, $600,000 in TAS, $575,000 in SA and $500,000 in NT. (Check your state’s website for current property values.)

  • You cannot have owned ANY property before 1 July 2000.
  • You must not have lived in your own property after 1 July 2000.
  • You must move into the property within 12 months.
  • You must live in the property for at least six months, with the exception of the ACT, which is 12 months. (You can live elsewhere during this time, however, the property needs to be declared as your primary residence and you should not get any benefits from it in the form of rent, tax returns, etc.)

Supercharge your homeownership goals. Unravelling the First Home Super Saver Scheme

The government is aiming to help first home buyers through the tax-friendly savings vehicle that is superannuation. The first home super saver scheme (FHSSS) was introduced in the 2017-2018 Federal Budget to improve housing affordability for first home buyers. It was part of a suite of measures designed to put downward pressure on rising housing costs. The government estimated that by using the plan, first home savers could potentially boost their savings by at least 30% compared to a standard deposit account.

The FHSSS allows first home buyers to make voluntary contributions, before or after tax, into their superannuation up to a certain amount which they can access later for their home deposit. This can be a great way to save a deposit faster. Voluntary contributions are especially beneficial in the case of concessional contributions to super – which are taken out of before-tax earnings – as the amount won’t be taxed at an individual’s personal income tax rate but rather the 15% superannuation tax rate in the fund.

You can contribute up to $15,000 per year and up to $50,000 in total. You cannot exceed the annual contribution limits ($27,500 per year for concessional contributions) which include the superannuation guarantee amounts your employer contributes.

In order to access the scheme, you must have not used the scheme before. In addition, you must never have owned a property of any kind previously (including investment property, commercial property, vacant land, a lease of land, or a company title interest in land). However, since it is assessed on an individual basis, couples, siblings, or friends can each use their own FHSSS contributions to purchase the same property if they are first home buyers. A couple could therefore each access their $50,000 in savings for a combined $100,000 deposit.

To withdraw savings from the FHSSS, you must be over the age of 18 and have made voluntary contributions to your superannuation before requesting a determination from the Australian Taxation Office (ATO). You must have a FHSSS determination before you sign a contract to purchase any property. Once you have received the determination, you can apply for a release of the amount specified in your FHSSS determination. You then have up to 12 months from the date you requested the release of FHSSS savings to sign a contract to purchase or construct a home.13

Pros of the FHSSS:
The FHSSS enables you to save money for your first home in the tax-advantageous structure of superannuation.
The tax treatment is especially beneficial if it is saved via before-tax voluntary super contributions, and it‘s estimated to boost potential savings for a deposit for a first home by 30%.

The FHSSS can be used by two people, which means a couple can combine their saved amounts for a deposit.
FHSSS amounts earn the shortfall interest charge within superannuation, which is 6.46% (as of the April-June 2023 quarter), a much better rate than what you could get in a savings account or even a term deposit.

Stay tuned for more insights from Wealth Through Property.

~Daimien Patterson
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Legal Disclaimer: This information ('the information') is presented for illustrative and educational purposes only. It is not presented nor should it be treated as real estate advice, legal advice, investment advice, or tax advice. All investments involve risk and potential loss of money. If you require advice in any of these fields you should contact a suitably qualified professional to assist and advise you. Your personal individual financial circumstances must be taken into account before you make any investment decision. We urge you to do this in conjunction with a suitably qualified professional. Daimien Patterson, IntegrityX Enterprises Pty Ltd, and their associated trading names, companies, researchers, authorised distributors and licensees, employees and speakers do not guarantee your past, present or future investment results whether based on this information or otherwise. Daimien Patterson, IntegrityX Enterprises Pty Ltd and their associated trading names, companies, researchers, authorised distributors and licensees, employees and speakers disclaim all liability for your purchase decisions. You should do your own independent due diligence and seek the advice of qualified advisors before making any investment decision.