Step by step guide on the new $25,000 building scheme
In this all-new manual you’ll learn:
• If you will qualify for the HomeBuilder Grant
• The precise criteria you need to satisfy to receive $25,000.
• If permanent residents can qualify for the HomeBuilder furnish.
• Lots of advanced tips, techniques, and common questions.
1. HomeBuilder Basics
Let’s start off things with a quick evaluation of the basics.
What is the HomeBuilder Grant?
HomeBuilder is a central authority grant of $25,000 payable to eligible owners that either construct a new home or considerably renovate an existing home in 2020. Eligible house owners need to construct a new home valued under $750,000 or spend among $150,000 to $750,000 on renovations of a property valued up to $1.50M.
The HomeBuilder grant is simplest available on constructing contracts signed among 4th June 2020 and 31 December 2020 and construction should begin within three months of the settlement date.
Do I qualify for the scheme?
The HomeBuilder scheme does have numerous qualifying standards, along with the form of property, your profits, and who you operate because of the builder.
To be eligible for the HomeBuilder furnish you have to:
• Be earning underneath an earnings cap, if you are applying for the grant as a man or woman your ‘2018-2019 tax return or later’ ought to be underneath $125,000 or if you are applying as a couple the combined profits on ‘your 2018-2019 tax go back or later’ need to be underneath $200,000.
• Sign a building agreement after 4th June 2020 and earlier than thirty-first December even though a licensed or registered builder, so you cannot be an owner-builder or use a contract from earlier inside the year despite the fact that creation hasn’t started out yet.
• Be constructing a new property that you’ll live in as your house, in which the total price of the belongings (residence and land) is not extra than $750,000. So you cannot use HomeBuilder on investment assets.
• Be shopping for an off the plan rental or townhouse that you have signed a contract to shop for on or after 4th June 2020 and on or earlier than 31 December 2020 and creation needs to begin on or after 4 June 2020 (and no later than 3 months after the contract is signed). So in case you are wanting to shop for an off the plan property, and the creation started earlier than 4th June 2020 – even if you signed the settlement after 4th June you may now not be eligible.
• Substantially renovate the present domestic which you live in, and spend among $150,000 and $750,000 on a maintenance agreement wherein the price of your private home (house and land) isn’t greater than $1,500,000. The renovations need to “enhance the accessibility, livability, and safety” of your property and can’t be used to construct matters out of doors of your own home like a swimming pool, tennis courtroom, or sheds.
• Begin construction of your new domestic or renovations within three months of the construction contract date. So if the contract is dated 1 October 2020, your builder wishes to have started out creation on or before 1 January 2021.
• Own or be shopping for belongings in your man or woman name and no longer an agency or trust.
• Be an Australian Citizen, unfortunately, the scheme isn’t always available to non-residents, permanent residents, or New Zealand Citizens.
Do I need to be a first domestic consumer to qualify for HomeBuilder?
No, you don’t need to be a first home buyer to get the $25,000 HomeBuilder to provide supplied you meet the eligibility standards above. You do however want to be living within the belongings for it to fulfill the standards, so you won’t qualify if the price range is for investment assets.
Gross or net income?
The earnings cap is much like the First Home Loan Deposit Scheme, so your earnings as a character need to be under $125,000 in keeping with 12 months and as a couple, your mixed profits need to be under $200,000.
• The income limit is based totally for your gross income, before tax and with the exception of superannuation.
The easiest way to check your earnings is to download your 2019 Notice of Assessment, which shows your taxable income for the 2018-2019 monetary yr.
The government has since updated the HomeBuilder Fact Sheet confirming the manner they’ll need you to show taxable profits is:
Taxable earnings is shown to your be aware of assessment. The be aware of assessment is issued with the aid of the Australian Taxation Office once your tax go back for an income yr is processed and this can be used to demonstrate your taxable earnings.
Note: Taxable income is your gross income less allowable deductions and represents the number of earnings you pay tax on.
Which 12 months will the income eligibility be primarily based on?
The Government has also said the income cap could be based on your man or woman ‘2018-19 tax return or later’.
At this stage, it’s miles unclear if you practice for the HomeBuilder Grant from 1 July 2020 if they will help you use your 2018-19 profits, or if they will require the 2019-20 earnings.
The eligibility criteria say that it’s miles primarily based at the ‘2018-19 tax go back or later‘ implying the most recent monetary yr, but the case studies provided by means of the authorities show examples of human beings making use of for the furnish post 1 July 2020 with income being established from 2018-19 returns.
The First Home Loan Deposit scheme, which makes use of the identical profits eligibility cap of $125k for a single person, or $200k for a pair states that:
• Singles – your taxable profits for the previous economic yr must no longer be greater than $125,000.
• Couples – your combined taxable income for the previous monetary year must not be more than $200,000.
On the First Home Loan Deposit scheme, it explicitly says:
• For all First Home Loan Deposit scheme locations reserved as much as 30 June 2020, you may need to provide a replica of your Notice of Assessment from the Australian Taxation Office for the 2018-19 economic year.
• For all First Home Loan Deposit scheme locations reserved from 1 July 2020, you will need to offer a duplicate of your Notice of Assessment from the Australian Taxation Office for the 2019-20 economic yr.
As we do not have the application form and respectable office work for HomeBuilder we cannot verify if you apply for HomeBuilder after 1 July 2020 how the government will check your profits.
In different words, we do no longer understand if the authorities will base your income at the 2018-19 tax go back, or use 2019-20 tax go back as this would be considered the previous economic yr from 1 July 2020 onwards.
An update from the authorities in their FAQ published 18th June 2020 says:
“The profits caps could be assessed in opposition to your taxable profits and primarily based on your 2018-19 Australian tax go back (or 2019-20).”
So it still doesn’t definitively confirm from what point they may want to look your 2019-20 returns.
We will update this text when that is confirmed, but if you have a change of situation – i.E. profits alternate of profits – you want to be aware in the HomeBuilder FAQ they do state:
WHAT HAPPENS IF THERE IS A CHANGE IN CIRCUMSTANCE AND I’M NO LONGER ELIGIBLE?
If your circumstances trade after you have applied for HomeBuilder but have no longer yet received the payment, and no longer meet the eligibility criteria, you will want to inform your State or Territory revenue workplace immediately.
Do Permanent Residents or Indefinite Visa Holders Qualify for the HomeBuilder?
Again they have used similar criteria to the First Home Loan Deposit Scheme, which is only available to Australian Citizens.
So you’ll not qualify in case you are a:
• Permanent Resident
• New Zealand Citizen
• Indefinite Stay Visa
Unlike the First Home Owners Grant which is available to permanent citizens and New Zealand citizens, regrettably, the HomeBuilder will now not be to be had to you in case you aren’t an Australian citizen.