Buying your first home is a major financial decision so it’s important to understand your financial responsibilities and what help is available to you
Before you buy your first home, here are some essential facts you need to know.
1. You can receive $10,000 with the FHOG
If you are buying or building a new home valued up to $750,000, you may be eligible for the First Home Owner Grant (FHOG).
2. You pay stamp duty on your purchase
When you buy your home, you'll most likely have to pay land transfer duty (otherwise known as stamp duty). How much you pay depends on your property's value, what you're using it for, if you are a foreign purchaser, and whether you are eligible for any exemptions or concessions.
3. There are exemptions and concessions
You may be eligible for – and receive – more than one exemption, concession or reduction from stamp duty for your property. In Victoria, these include:
- First-home buyer duty reduction – a one-off duty reduction for a PPR valued up to $600,000
- Off-the-plan concession – a duty concession for an off-the-plan property, either as a land and building package, or as a refurbished lot
- Pensioner concession – a one-off duty exemption or concession for a new or established home valued up to $750,000
- Principal place of residence (PPR) concession – a duty concession for when a property you buy, valued up to $550,000, is intended as your primary home
- First-home owner with family exemption/concession – a one-off duty exemption or concession for properties valued at $200,000 or less
- Young farmer’s exemption/concession – a one-off duty exemption/concession for young farmers buying their first farmland property
As the ongoing owner of a property in Victoria, you may also have to pay various annual taxes and levies. For example, from 1 January 2016, a 0.5 per cent absentee owner surcharge on land tax will apply to Victorian land owned by an absentee owner.
If you are buying or building a new home, you may be eligible for the FHOG ($10,000) if you signed your contract on or after 1 July 2013.
Your new home can be a house, townhouse, apartment, unit or similar, but it must be valued at $750,000 or less and be the first sale of the property as a residential premises. You’re not eligible for the FHOG if you or your spouse/partner have already:
- Received the FHOG in Australia,
- Owned a home in Australia, either jointly or separately, prior to 1 July 2000,
- Lived in a home in Australia in which either of you owned or part-owned on or after 1 July 2000, for a continuous period of at least six months
These criteria apply even if your spouse/partner is not an applicant with you for the FHOG.
- All FHOG applicants must be at least 18 at settlement or completion of construction (although there is discretion with this age requirement),
- You (or at least one applicant) must be an Australian citizen or permanent resident at the time of settlement or completion of the home’s construction, and
- You (or at least one applicant) must intend to live in the home as your PPR for at least 12 months, commencing within 12 months of settlement or completion of construction
New Zealanders holding a special category visa under s32 of the Migration Act 1958 and anyone holding a permanent visa under s30(1), are considered to be a permanent resident of Australia. To be eligible, NZ citizens must be in Australia at the time of settlement.
Established homes are no longer eligible to receive the FHOG. However, if you are buying an established home as your first home and you meet the FHOG eligibility criteria (but for the fact that it is not a new home), you may be entitled to:
- First-home buyer duty concession of up to 50 per cent (for homes valued at $600,000 or less), and/or
- PPR concession (for homes valued at $550,000 or less)
For contracts signed prior to 1 July 2013, a FHOG of up to $7000 is still available for eligible applicants if you bought an established home.
Who must be included on the FHOG application?
Anyone who will be named on the property’s title must be listed as a FHOG applicant. Importantly, you must also include your spouse/partner’s details on the FHOG application form regardless of whether they are going to be on the property’s title. Their details must be considered when answering the eligibility questions.
If you are ruled ineligible for the FHOG, but you believe you can prove otherwise, please lodge a written objection with us.
Contracts signed before 1 July 2012
If you qualified for the FHOG and signed your contract before 1 July 2012, you may have also been eligible for the First Home Bonus and the Regional Bonus.
To be eligible, your property's value must have not exceeded $500,000 (for contracts entered into up to 30 June 2009), and not exceeded $600,000 (for contracts entered into between 1 July 2009 and 30 June 2012)
If your contract was signed between 14 October 2008 and 31 December 2009 you may have also been eligible for the First Home Owner Boost. For further information about the boost, please contact us.
If you are buying your first home and it is valued at $600,000 or less – regardless of whether it is a new or established property – you may be entitled to a duty reduction of up to 50 per cent.
The amount of your duty reduction will depend on when settlement occurs. If your settlement is on or after 1 September 2014, you will receive the full 50 per cent reduction.
Meeting the eligibility requirements of the FHOG will entitle you to the duty reduction. For further information refer to our rates of taxes, duties and levies.
You can receive a duty concession as a first-home owner buying an off-the-plan land and building package or a refurbished lot.
The off-the-plan concession deducts, from the contract price of your home, the cost of construction or refurbishment which occurs on or after the contract date. This means that you pay duty only on the improved value of the land, the non-deductible costs and the completed construction or refurbishment including GST as at the contract date.
Typically, construction will not have started or is incomplete at the date of the contract.
To apply for an off-the-plan concession, the vendor must complete our statutory declaration.
Off-the-plan land and building packages
An off-the-plan land and building package is where you enter into a contract to buy land and build a new house, townhouse, apartment or unit on that land.
Off-the-plan refurbished lot
An off-the-plan refurbished lot is where you enter into a contract for the refurbishment of an existing building and the refurbishment is not complete at the date of contract. A typical example is the conversion of an office building or warehouse into residential apartments.
A refurbishment can also occur where new construction works take place but the facade or shell of the original building is retained.
For refurbished lots, the off-the-plan concession only applies to the first sale after registration of the plan of subdivision. It does not apply to either subsequent transactions or sub-sales.
A duty exemption or concession may be available to eligible first-home buyers with a family who bought their home on or after 1 January 2006.
A full exemption is available where the property’s total value is not more than $150,000. A concession is available where the property’s total value is not more than $200,000.
There are eligibility requirements. Most importantly, you must have a dependent child at the date of the contract of sale. A dependent child means a child under 18 in the custody, care and control of, and ordinarily resident with the person/s buying the property.
If you bought the home with your spouse/partner, you must both be eligible.
If you believe you are eligible, please contact us on 13 21 61.
You may qualify for the first-home buyer duty reduction and a one-off pensioner exemption/concession when buying your home.
- The 50 per cent duty reduction applies to homes valued up to $600,000, and
- The one-off pensioner exemption/concession applies to homes valued up to $750,000. The full exemption applies up to $330,000 and the concession applies between $330,000 and $750,000
To be eligible for this exemption/concession, you must:
- Hold one of the relevant concession cards at the settlement date,
- Buy the property for market value, and
- Intend to reside in the home as your PPR
Your home must be:
- Newly built, or
- An established property, or
- A home built under a house and land package (where the person who sells you the land also builds the home as part of the agreed price), or
- A home that is built within three years of you acquiring the land
Note: eligible pensioners can receive the exemption or concession only once.
Joint owners where one or both are pensioners
We apply flexibility in cases where eligible pensioners buy a part (fractional) interest in a property rather than the whole property. You can still be entitled to an exemption/concession if you buy a home with someone who is not an eligible pensioner.
Example of fractional interest in a property for pensioners
Alex is an eligible pensioner who buys a home with Bryan, who is not an eligible pensioner. Each buys a 50 per cent interest in the property. The total purchase price is $600,000. Duty on $600,000 is $31,070. The current threshold limit for a full pensioner exemption from duty is $330,000 (with the pensioner concession applying from $330,000 up until $750,000).
- Alex is fully exempt as their 50 per cent interest in the property equates to $300,000, and
- Bryan must pay $15,535, being 50 per cent of $31,070
A principal place of residence (PPR) simply means the primary home in which you live. This does not include holiday or investment properties.
As a first-home buyer, you may be eligible for a PPR concession from duty if you intend to live in your home for a year within 12 months of your settlement or completion of construction. This is called the residency requirement.
The concessional rate of duty you pay depends on the value of your PPR and the date on which you signed the contract of sale. Please use our calculator to calculate what you will pay.
What is the residency requirement?
The residency requirement necessitates that you must intend to live in your home for at least a year as your PPR within 12 months of settlement or completion of construction of your home.
You must tell us in writing as soon as possible if circumstances beyond your control prevent you from satisfying this requirement of whichever grant, concession or discount you have received.
With two or more owners on title, at least one of them has to satisfy the residency requirement but it is not necessary for the same owner to live in the property for the entire 12 months.
Please note your home must be lawfully fit for residential occupation to be considered your PPR.
Eligible farmers aged below 35 may receive assistance when buying their first single parcel of farmland.
- For farmland valued at less than $600,000, eligible farmers may be exempt from duty on the first $300,000, and
- For farmland valued between $600,000 and $750,000, eligible farmers may receive a duty concession
Please complete our application form if you wish to claim the young farmers duty/concession for buying a farm.
You will still be eligible even if you have previously owned non-farmland.
Your obligations and responsibilities
You must always provide us with true and accurate information. If we find you provided false or misleading statements on any application or do not meet the residency requirements, you will be ordered to repay the grant and/or any duty amounts. You may also face penalties.
If you believe that you overpaid duty when you bought your home because, for example, you were eligible but didn’t claim an available benefit, you may apply for a duty reassessment. If we find that you are eligible, we will refund the overpaid duty.
To apply for a reassessment, you should send us a cover letter along with the completed application forms for the relevant exemption, concession or reduction/s and any supporting documents.
Your request must be made within five years of your payment of the duty.
Please note the amount of your refund depends on a number of factors, including the settlement date and the value of your property at that time. We receive large volumes of refund applications so please be aware that your case may take up to 60 days to process.
Getting it right
Our priority is to help you pay the right amount of tax at the right time. Learn more about how we'll do this.