20 November 2015

Ask RiotACT: Stamp Duty Deduction and First Home Owners Grant

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Hi Rioters,

First time poster, looked all over this site and can’t find information relating to my situation so I thought I’ll put this post. I’m a first home buyer who just bought an off-the-plan townhouse I want to rent out. My problem is that I want to get both the stamp duty deduction and first home owners grant (FHOG). I was wondering whether it was possible to rent my townhouse for a 1-6 months period and then live in it continuously for 12 months to get both the stamp duty deduction and FHOG? Anyone who have done this want to share their experience or anything?

Cheers and appreciate any advice. Obviously I have been doing my own research and haven’t found exactly what I’m after which is why I’m here. 🙂

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wildturkeycanoe9:36 am 28 Dec 15

The first home owners grant is there to help people get their foot into the housing market so they can have a place of their own. Trying to claim that for a property you obviously want to use as an investment only ruins it for all the genuine to-be-homebuyers. If it is an investment, do not try to work around the system, the FHOG is not there to help you get rich quick.

Hi all,
Sorry for the late response, I just got back from a month long holiday. To some of the people that suggest that you have to live in it immediately to qualify for the FHOG, this isn’t true. You only need to do it within the first 12 months.

Hmm, what about living in the townhouse for the first 12 months and then renting it out to claim the stamp duty deduction because it would be still within the first financial year after you purchase the place? Thanks for everyone who have contributed!

As mentioned above, you must reside in the premises for 12 months, commencing within 12 months of completion of the relevant transaction (ie, settlement).
The above quote from TuggLife refers to the eligibility of a property (ie, it must have been new or substantially renovated at the time of the transaction). It does not imply that you must be the first resident after your purchase. You’d receive the grant at the time of settlement anyway. If you fail to meet the residency requirement, you’d be required to pay it back.

For Stamp Duty, do you mean a deduction (presumably from income tax), or do you mean the Stamp Duty concession (ie reduced stamp duty payable)?
I can’t answer regarding any deduction, but the concession has the same residency requirements as the FHOG – 12 months commencing within 12 months of purchase.

Strongly suggest speaking directly to the ACT Revenue Office and/or your conveyancer, rather than rely on the misinformed, incorrect and/or vague advice in this discussion thread.

Alexandra Craig said :

I’m pretty sure you have to live in it immediately to qualify for the FHOG and stamp duty reduction.

100% correct.

You definitely can’t claim both. FHOG is if you are purchasing your first primary place of residence. Claiming Stamp Duty as a tax deduction is only applicable if the property is an investment property. If you move in for the first 6 months the stamp duty deduction won’t apply, if you rent it out for the first 6 months then the FHOG won’t apply. Word of caution, if you try to the old switch-a-roo after getting the FHOG (e.g. rent it out after 6 months) then they Government will make you pay back the grant plus interest and penalties (I’ve seen this happen a number of times)

The answer regarding the FHOG is right there on the ACT Revenue site:

“the residency requirement for the First Home Owner Grant has been increased from 6 months to 12 months, commencing within 12 months of completion of the eligible transaction.”

This means the grant recipient must live in the property for at least 12 months and must start living in it within 12 months of purchase.

Claiming the stamp duty could pose another question. If your intention, as you’ve stated, is to live in the property and you’re only renting it out for a short period, is the stamp duty an expense incurred in relation to renting the property or an expense incurred in relation to buying your home? A question for your tax advisor.

The answer is on the application form on the ACT revenue office page.

Unable to quote from it at the moment, but a quick Google search will locate it.

The ACT Revenue Office site says:

“For an applicant to be eligible for the FHOG on the purchase of a new home, the home must not have previously been occupied, and the home must not have previously been sold as a place of residence. This is a two-limbed test where both conditions must be satisfied.”

I don’t see how you can satify that condition by renting it out prior to receiving the grant. Penalties can be significant for rorting the system. My more general advice is that, for one of the larger purchases in life, it would be beneficial to talk to your conveyancer, lawyer or financial adviser for advice regarding your specific situation.

Alexandra Craig10:49 am 17 Nov 15

I’m pretty sure you have to live in it immediately to qualify for the FHOG and stamp duty reduction.

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