If you're building or renovating your home, you can receive up to $25,000 through the federal government's HomeBuilder grant. But there are strict eligibility requirements.
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The federal government's HomeBuilder scheme provides cash grants to Australian citizens (not permanent residents) building a new home or making a substantial renovation to an existing home.
The grant is designed to stimulate the Australian economy in the wake of the coronavirus pandemic and recession. But while generous, there are eligibility criteria relating to both the size of the renovation, the value of the property and your income, which mean that not every homeowner or builder will qualify.
Here's what you need to know.
The HomeBuilder grant is now $15,000
Initially HomeBuilder was a $25,000 grant, available to eligible Australians who signed a contract to build or renovate a home between 4 June 2020 and 31 December 2020. HomeBuilder was extended into 2021 but the grant is now $15,000. For 2021 your contract to build or renovate your home must be signed between 1 January 2021 and 31 March 2021.
For both cases you have until 14 April 2021 to submit a HomeBuilder application. Construction must begin within six months of signing the contract.
Who is eligible for a HomeBuilder grant?
The HomeBuilder grant will provide a cash grant to Australian citizens (not residents) who meet the following criteria:
- Use of the grant. You can use a HomeBuilder grant to construct a new home or renovate an existing home. It cannot be used for investment properties.
- Citizenship. HomeBuilder is only offered to Australian citizens, not permanent residents.
- Income. A single applicant must be earning $125,000 a year or less. If a couple, your combined income in the last tax year must be $200,000 or less.
- Value of the property. If you're using the grant to cover the construction of a new home, the value of the home and land combined must not exceed $750,000 (for the $15,000 grant, this rises to $950,000 in NSW and $850,000 in VIC but remains the same everywhere else). If you're using the grant to cover renovation costs, the value of your property (before the renovation) must be $1.5 million or lower.
- Renovation cost. The cost of your renovation must be between $150,000 and $750,000.
- Time frame. Any building or renovation work must begin within six months of the date the contract is signed.
- No owner-builders. You cannot use the grant if you're undertaking your own improvements or construction. You will need to hire licensed builders (if you are a licensed builder you cannot work on your own property and claim a grant.
- Exclusions. Some renovations are not covered by the grant, including adding a pool, tennis court or detached garage. Bathroom and kitchen renovations are covered.
How do I apply for a grant?
While HomeBuilder is a federal scheme, it is administered through state and territory governments. You need to visit the particular revenue office for your state or territory and apply for HomeBuilder there.
When applying you will need provide a signed contract with a licensed builder, personal details and information about the property.
How helpful is HomeBuilder?
HomeBuilder is a generous cash grant, but you have to look very closely at your income, your property's value and your construction or renovation plans to see if it can actually help you.
If you were planning on building a home within the value limits ($750,000), then HomeBuilder is definitely a win for you. As long as the timing works out.
The eligibility criteria for renovations are quite narrow, and won't cover a lot of people, especially those doing small renovations ($150,000 as a minimum effectively rules out any small renovations, such as retiling, window replacement or new carpet).
A lot of homeowners looking to make small improvements to their home won't qualify.
Understandably, industry groups have been quick to praise the scheme.
"The HomeBuilder incentive is the largest direct contribution to owner-occupier housing construction that an Australian government has ever made," said HIA Managing Director Graham Wolfe. "This incentive will help to address the projected decline in housing activity over the next 12 months."
"The federal government's HomeBuilder scheme will be a welcome shot-in-the-arm for the construction section over the next six months," said Property Investment Professionals of Australia (PIPA) chairman Peter Koulizos.
"The restricted timeframe of the scheme as well as the requirement for projects to begin within three months of the contract date will also help to prevent profiteering from unscrupulous operators."
I'm not eligible for HomeBuilder: What other support is available?
HomeBuilder is available for first home buyers and existing homeowners, but eligibility is quite restricted. However, there are several support policies targeted at first home buyers that are worth looking into.
You may be eligible for some or all of the following:
- First home owner grant. This grant for first home buyers varies in every state and territory, but typically provides first-time buyers with a cash grant if they're building a new home (or in some cases, buying an existing home), depending on the property's value.
- Stamp duty concessions. Many first home buyers, even those who don't qualify for a grant, may receive an exemption or discount on stamp duty. This is a big saving, as stamp duty is one of the biggest costs associated with a property purchase.
- First home loan deposit scheme. This federal scheme allows first-time buyers to get a home loan with just a 5% deposit while avoiding the hefty lenders mortgage insurance that your lender normally charges when you have a small deposit. There are a limited number of places for this scheme.
- First home super saver scheme. Through this superannuation scheme for first home buyers, you can make additional contributions to your super fund, then withdraw them to use as a deposit on your first home, with tax benefits for doing so.
More guides and tips on construction and renovation finance
At Finder, we've got guides on home loans and finance for first home buyers, builders and people looking to fund their renovations. The following guides may be helpful to you whether you qualify for HomeBuilder or not:
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