If someone asked you what the difference between a ‘First Home Concession’, a ‘First Home Owners’ Grant?’ and a Buffalo is, you might think it was a poor attempt at a joke (guilty). However, for a Queensland home buyer, it is serious business (except for bit about the Buffalo). The concession and the grant can literally mean the difference between being able to afford to settle – or not. If a buyer discovers that the answer is ‘or not’ and the contract has already become unconditional, there can be some very serious consequences. That is why it is incredibly important to make sure you are aware of the some of the traps.
At DSL Law, lenders and real estate agents often ask us what they should tell their clients and their buyers about the concession and the grant. To answer this question we provide a four step guide (shown below). At a high level, our suggestion is always to keep it practical. Just tell the buyers what the grant and the concession are, what the qualification criteria is and, importantly, what could jeopardise their access or entitlement to them after settlement.
The government can make a reassessment after settlement, which sometimes involves the buyer repaying the amount of their benefit (with interest). In our experience, most reassessments of duty do not occur because people aren’t qualified to claim in the first place – they occur because something happens after settlement.
You can see that there are significant and subtle differences between the Concession and the Grant. More information can be found at www.initaties.qld.gov.au and https://www.qld.gov.au/housing/buying-owning-home/first-home-concession. The question of whether the grant or concession (or both) applies is pretty complicated, and depends on the individuals’ circumstances. We are not saying this just because we are lawyers, but we recommend getting legal advice in every case.
So, what is the difference between a First Home Concession, a First Home Owners’ Grant and a Buffalo? Well, a buffalo is pretty straight forward and you know what to expect just by looking at it.
What to tell buyers about FHOG and FHC in four steps
Step One: Briefly explain FHOG and the FHC
- The first home concession (concession) is a discount (or concession) off the normal rate of transfer duty for homes in Queensland. Currently, it means first home buyers of established property up to the value of $500,000 will not incur any duty. That’s right – zero!
- The first home owners’ grant (grant) is an amount of up to $20,000 available to first time buyers of new homes. The grant is available until December 2017.
Step Two: Explain the main qualifying criteria
- The home must be the buyer’s first property. For the grant, they buyer cannot have previously owned property anywhere in the world.
- The value of the home needs to be less than $550,000 for the concession or less than $750,000 for the grant.
- For the grant, the home needs to be NEW (that can include a substantially renovated home).
Step Three: Protecting the concession after settlement:
- Occupy the property within 1 year.
- Do not dispose of the property for 2 years. “Dispose” of the property is broader than just selling – it can include leasing.
- Do not rent out a room of the property for the first year after moving in.
- Do not rent the property to a tenant before moving in, except to a tenant that is in place when the contract is signed (PROVIDED the tenant moves out within 6 months from settlement).
Step Four: Protecting the grant after settlement:
- Occupy the property within 1 year as your principal place of property.
- Live in the property for a continuous period of 6 months.