Housing stimulus package - your questions answered
Written and accurate as at: Jun 04, 2020 Current Stats & Facts
This week, the Federal Government’s announced a $688 million housing stimulus package known as the HomeBuilder scheme. In this article, we provide answers to key questions surrounding the program.
What is the new HomeBuilder scheme?
The scheme consists of a one-off, tax-free payment of $25,000 from the government to property owners who meet certain conditions.
Why is the purpose of the scheme?
The Australian government has acknowledged that the housing sector is a critical component of the economy. In the wake of the adverse economic effects emanating from COVID-19, the March quarter national accounts showed dwelling investment in Australia fell 2.9% in the quarter and has fallen by more than 15% over the past 12 months. This contraction is expected to worsen in the June quarter.
The HomeBuilder program seeks to provide new jobs and wage growth in the construction sector to support the economy over time.
Who is eligible for the grant?
To be eligible for the HomeBuilder scheme, an applicant must:
- Be an Australian citizen aged 18 years or older and be an individual, not a company or trust.
- Meet one of the following two income caps:
- $125,000 per annum for an individual applicant based on your 2018-19 tax return or later; or
- $200,000 per annum for a couple based on both 2018-19 tax returns or later; - Enter into a building contract between 4 June 2020 and 31 December 2020 to either:
- Build a new home as a principal place of residence, where the property value does not exceed
$750,000 (including the land value); or
- Substantially renovate your existing home as a principal place of residence, where the
renovation contract is between $150,000 and $750,000, and where the value of your existing
property does not exceed $1.5 million; - Commence construction within three months of the contract date.
Are homeowners allowed to access the grant to renovate their investment property?
No. Investment properties do not count as part of the scheme. An applicant must be the owner-occupier.
Can the HomeBuilder grant be used to build a swimming pool?
No. Under the scheme, the only renovations that are eligible for the grant are those that improve the accessibility, liveability and safety of a property. This means that pools, tennis courts, spas, saunas and garages are not applicable.
Who is able to undertake the building work or renovations?
All works need to be conducted by a registered or licensed builder, depending on the state or territory in which the applicant lives.
Is the HomeBuilder grant just for first home buyers?
No. The grant applies to any property owner provided they meet the eligibility requirements above.
What is the application process for the HomeBuilder grant?
Applications for the grant will be handled via the relevant State or Territory revenue office in which the applicant lives. At this point, it is not yet clear as to the exact process required by each State or Territory. What has been made clear is that the applicant will need to provide proof of identity, a copy of the contract with a licensed builder, tax returns and other property documents such as council approvals and building contracts.
Can the HomeBuilder grant be used in conjunction with other schemes?
Yes. Homebuilder can be used in conjunction with State and Territory first home-owner grant programs, stamp duty concessions and other grant schemes, as well as the Commonwealth’s first home loan deposit scheme and first home super saver scheme.
Moving forward
The federal package represents an important shift from the stabilisation phase of the Government’s response to COVID-19 to one that addresses the importance of kick-starting activity across the economy.
For more information on the HomeBuilder scheme, refer to this Fact Sheet provided by Treasury.
If you would like to discuss anything mentioned in the above article, and its relevance to your financial situation, goals and objectives, please do not hesitate to contact us.