Overview of the 'HomeBuilder' program

Technical resource

On 4 June 2020, the Federal Government announced a further fiscal response to the economic challenges posed by COVID-19.

The proposed ‘HomeBuilder’ program provides eligible owner-occupiers (including first home buyers) with a tax free grant to partially offset the cost of building a new home or substantially renovating an existing home.

This proposal is subject to the passage of legislation.

What is HomeBuilder?

The proposed ‘HomeBuilder’ scheme is a time-linked grant of $25,000 to build a new home or substantially renovate an existing home where the contract is signed between 4 June 2020 and 31 December 2020.

HomeBuilder 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.

It estimated that HomeBuilder will provide around 27,000 grants at a total cost of $680 million, however the actual figures will be demand driven as the number of HomeBuilder grants is uncapped.

Homebuilder will be implemented via a National Partnership Agreement which will utilise existing State and Territory mechanisms. For those eligible, the $25,000 payment will be made by the relevant State or Territory Revenue Office directly to the applicant(s).

Subject to the eligibility criteria, all dwelling types including houses, apartments, house and land packages and off-the-plan purchases are eligible for HomeBuilder. Importantly, an owner occupier must be the one entering the contract to build a new dwelling or substantially renovate their existing dwelling.


To receive the HomeBuilder grant, all the following eligibility criteria must be satisfied:

  • The applicant(s) must be a natural person(s) (i.e. not a company or trust) who is an Australian citizen(s) aged 18 years or older.

  • The applicant(s) meet one of the following two income caps:
    • $125,000 per annum for an individual applicant based on their 2018/19 (or later) tax return, or
    • $200,000 per annum for a couple based on both their 2018/19 (or later) tax returns.
  • The applicant(s) enters into a building contract between 4 June 2020 and 31 December 2020 to either:
    • Build a new home as a principal residence, where the property value does not exceed $750,000, or
    • Substantially renovate their existing principal place of residence, where the cost of the renovation contract is between $150,000 and $750,000, and where the value of the existing property (prior to the renovation) does not exceed $1,500,000 (house and land). A ‘knock down rebuild’ is considered to be a ‘substantial renovation’, not a ‘new home’.
  • Construction must commence within three months of the contract date.

  • For renovations, the works must be to improve the accessibility, safety or liveability of the dwelling. The renovation cannot be for additions to the property such as swimming pools, tennis courts,  standalone garages, sheds spas and saunas.

  • The applicant(s) must:
    • Enter into the building contract at arm’s length, and
    • Not have a ‘special relationship’ with the other party such as being a relative, and
    • Not be an owner builder. 

Advice points

Many who currently own their principal residence and satisfy the income and other requirements may not be able to afford or justify the minimum renovation spend of $150,000.

Case study 1 – Substantial renovation – Self-funded retirees eligible for HomeBuilder grant

Simon and Betty (both Australian citizens) are a married couple in their early-70’s. Their assets and income sources are:-

Owner Asset type Asset value 2018/19 income
Joint Principal residence $1,400,000 Nil
Joint Term deposits and cash $2,000,000 $40,000 (taxable)
Simon Superannuation - Account based pension $1,500,000 $75,000 (taxable)
Simon Superannuation - Accumulation phase $200,000 Nil
Betty Superannuation - Account based pension $1,500,000 $75,000 (tax free)

Simon and Betty decide to withdraw Simon’s superannuation accumulation account to fund a $200,000 renovation to their principal residence. On 10 June 2020, they sign an arm’s length contract with an unrelated licenced builder and work commences 6 weeks later.

As Simon and Betty satisfy the eligibility criteria, they are eligible for the $25,000 HomeBuilder grant. For the criterion relating to the value of the property, it does not matter that it is likely the property will be valued at more than $1,500,000 after the renovation is complete, as the value prior to the renovation is below this threshold.

Case study 2 – Substantial renovation – Social Security recipients eligible for HomeBuilder grant

Robert and Angela (both Australian citizens) are a married couple in their late-60’s receiving part Age Pension. Their assets and income sources are:- 

Owner Asset type Asset value 2018/19 income
Joint Principal residence $800,000 Nil
Joint Term deposits and cash $600,000 $12,000 (taxable)

Robert and Angela decide to use a portion of their cash investments to fund a $175,000 renovation to their principal residence. On 24 June 2020, they sign an arm’s length contract with an unrelated builder and work commences 10 weeks later.

As Robert and Angela satisfy the eligibility criteria, they are eligible for the $25,000 HomeBuilder grant.

Once the renovation is complete and the grant is received, Robert and Angela’s assessable asset for Social Security purposes has reduced by $150,000 ($175,000 renovation cost minus $25,000 HomeBuilder grant). This will increase their rate of Age Pension by $450 per fortnight (combined).

Case study 3 – Renovation – Young couple not eligible for HomeBuilder Grant

Sergio and Ania (both Australian citizens) are a de-facto couple in their mid-20’s. They own their principal residence which is valued at $600,000 with outstanding borrowings of $300,000. During 2018/19, Sergio and Ania each earned salary income of $80,000 (which is their sole source of income).

Over time, Sergio and Ania have made additional payments to their mortgage and their bank has confirmed that they are able to redraw up to $100,000 from their home loan.

Sergio and Ania wish to renovate their kitchen at a cost of $40,000. Despite satisfying the other criteria, they are not eligible for the HomeBuilder grant as the cost of the renovation is less than the $150,000 minimum.

Case study 4 – New home purchase – Young single eligible for HomeBuilder Grant

Sukura is an Australian citizen aged in her late-20’s who has never previously owned property. On 11 June 2020, she purchased a studio apartment for $575,000 in New South Wales (NSW) which she will use as her principal residence. Sukura has funded this purchase via a $175,000 deposit and has borrowed the remaining funds from a bank.

During 2018/19, Sukura’s earned a salary of $100,000 (which is her sole source of income).

As Sukura satisfies the eligibility criteria, she qualifies for the $25,000 HomeBuilder grant.

As she is a first home buyer, she may also be eligible:-

  • For a full exemption from NSW transfer duty*.
  • For the $10,000 NSW First Home Owner (new homes) Grant* if this is the first time this property has been sold, and nobody has previously lived in the property.
  • To release an amount from her superannuation under the First Home Super Saver scheme if she has made voluntary concessional or non-concessional contributions to her super since 1 July 2017.

* These concessions and eligibility conditions vary between States/Territories. Generally the purchase price is subject to a maximum threshold.  

For further information, please see the Treasury fact sheet and FAQ documents.

Information on when and how eligible applicants will be able access HomeBuilder will be available through the relevant state or territory revenue office.

For any further questions, contact BT Technical Services on 1800 655 901 or by email at technical@btfinancialgroup.com.

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