Am I eligible for the HomeBuilder grant?

4 min read

Available for a limited time, the HomeBuilder grant offers eligible owner-occupiers, including first-home buyers, a potential tax-free $25,000 boost to help fund the cost of building a new home or substantially renovating an existing home. It’s intended to provide much-needed support to the struggling residential construction industry as it recovers from COVID-19.

The proposed new HomeBuilder scheme announced on 4 June 2020, will complement existing State and Territory First Home Owner Grant programs, stamp duty concessions and other grant schemes, as well as the Federal First Home Loan Deposit and First Home Super Saver Schemes.

Although not specifically targeted at first-home buyers, the Government expects the HomeBuilder grant will be popular with first-home buyers looking to buy a house and land package, as well as growing families upgrading to a bigger new home. It could also spark interest for retirees who might see this as a trigger to downsize their home, using the grant to help purchase a new smaller apartment or unit, and potentially the money saved to invest into their retirement fund.

As with any Government grant program, there are rules around who is eligible and the type of renovations or properties you can use the money for. To help you work out whether the HomeBuilder grant is for you, we’ve put together a simple checklist to makes things easier.

Deciding if you’re eligible

The first and most simple criteria for the Homebuilder grant is that you must be an owner-occupier. If you tick that box, and you’re someone looking to build or renovate your home, you must also meet the following criteria.

  • Be an Australian citizen aged 18 or over.
  • Have an annual income less than $125,000 for individuals or less than $200,000 for couples (based on your 2018/19 (or later) tax return).
  • Planning an appropriate renovation or new build

The Government has defined strict price caps for renovations and new builds to ensure the HomeBuilder scheme sits in-line with other programs already operating in Australia.

  • Substantial renovations – the planned cost of a renovation must be between $150,000 and $750,000, and the value of the property being renovated should be less than $1.5 million when work begins.
  • New builds – the purchase value of new homes (house and land combined) must not exceed $750,000. This also applies to new homes bought off-the-plan.

In addition, all building contracts must be entered into at arm’s length. This means the builder you choose cannot be a relative for example, and you cannot be an owner-builder.

Types of property eligible for the HomeBuilder grant

Good news – this is the most flexible part of the HomeBuilder scheme. Whether you own a house or apartment, or you’re buying a new house and land package or a property off-the-plan, all are eligible types of dwelling.

However, you must live in (or plan to live in) the property, ie you’re an owner-occupier. The HomeBuilder grant is not available to investors looking to renovate or those wanting to build a new home to use as an investment property.

Defining ‘substantial renovations’

In simple terms, the renovations you undertake must improve the liveability, accessibility or safety of your home. And the changes or additions must be connected to the main property.
While there isn’t an exhaustive list of do’s and don’ts, here are a few things that aren’t considered improvements.

  • Tennis courts
  • Swimming pool 
  • Spas and saunas
  • Sheds or garages not connected to the property

Given that the scale of required renovations far exceeds just painting walls and replacing carpets, the work must be carried out by a licensed or registered builder. Also, the terms of any contract should be commercially reasonable and the contract price should reflect fair market value and not be inflated to ensure it fits within the imposed price boundaries.

Dates to be aware of

The HomeBuilder grant is only available for a limited time, so if you’re thinking of applying there’s no time to lose. There are a couple of important dates you should be aware of.

  • You must enter into a building contract for the renovation or building works between 4 June 2020 and 31 December 2020.
  • Construction work must start within three months of the contract date.

The challenge for many people will be that planning for major renovations or building takes time. It’s a process that involves several decision-makers, along with the time taken to produce the relevant architectural plans and seek council approval.

So, while potential homeowners are keen to take advantage of the scheme, the short time period associated with the HomeBuilder grant may make it difficult to access if you weren’t already planning to build or renovate anyway.

Getting started

At this time, the HomeBuilder scheme has still to pass through Parliament. You'll be able to apply when the Government of the relevant State or Territory where your property is, signs the National Partnership Agreement with the Commonwealth Government.

The best way to keep up to date with when applications are open and how to apply is via your relevant State or Territory authority.

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This article was prepared by BT, a part of Westpac Banking Corporation ABN 33 007 457 141, AFSL and Australian Credit Licence 233714. This information is current as at 29 June 2020. This article provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. The article does not constitute financial product advice, and before acting on it, you should seek independent advice about its appropriateness to your objectives, financial situation and needs.

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