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How to take advantage of the homebuilder grant

24th Jun '20 • By Danae Baggs

The new HomeBuilder grant will provide eligible owner-occupiers (including first home buyers) with $25,000 to build a new home or substantially renovate an existing home. This is a time-limited program to help the residential construction market get through the COVID-19 pandemic. What are the underlying conditions and how can you take advantage of the offer? We’re here to explain.

Time Limited
You must sign a HomeBuilder contract between 4 June 2020 and 31 December 2020 to access the grant. Construction must commence within 3 months of the contract date.

Eligibility Criteria
To access HomeBuilder, you must be an owner-occupier and you must meet the following criteria:

  • Aged 18 years or older

  • Australian citizen

  • Natural person (not a company or trust)

  • Meet one of the following income caps:

    • $125,000 per annum for an individual applicant based on your 2018-19 taxable income

    • $200,000 per annum for a couple based on both 2018-19 taxable incomes

  • Enter into one of the following contracts:

    • Building contract to build a new home as a principal place of residence where the property value does not exceed $750,000

    • Renovation contract to 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 (house and land) does not exceed $1.5 million pre-renovation.

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  • Contracts must be signed between 4 June 2020 and 31 December 2020

  • Construction must commence on or after 4 June 2020 and within 3 months of the contract date.

Most dwelling types are eligible for HomeBuilder, including:

  • House

  • Apartment

  • Land package

  • Off-the-plan

  • Building on vacant land

  • Prefabricated house (considered if construction is undertaken by a licensed builder).

Integrity Measures
In addition to the eligibility criteria, please note the following stipulations. These integrity measures are designed to stop the program being hijacked.

  • Owner-builders are ineligible.

    • An owner-builder is a licensed or registered builder who is building or renovating on their own property, i.e. takes legal responsibility for domestic building work carried out on their own land/property.

  • Investment properties are ineligible.

  • For couple applicants, both people have to be Australian citizens to be eligible.

    • Temporary and permanent residents do not qualify.

  • Renovation works must be to improve the accessibility, safety and liveability of the dwelling.

    • Knock-down rebuilds are considered substantial renovations.

    • Structures unconnected to the property like swimming pools, tennis courts, outdoor spas and saunas, sheds, garages or standalone granny flats are NOT considered substantial renovations.

  • Building or renovation work must be undertaken by a registered or licenced building service ‘contractor’ (depending on your state or territory) and named as a builder on the building licence or permit

  • The contract must be made at “arm’s length”, by two parties independent of each other and without some special relationship (e.g. relatives).

  • Contract terms must be commercially reasonable and the contract price should not be inflated compared to the fair market price.

Complementary Grant Programs
HomeBuilder will complement and not replace existing state and territory grant schemes. Make sure you check whether you are eligible for any other grant programs, such as:

Like existing state and territory first home owner grant programs, HomeBuilder will be tax-free.

Payment Dates
You’re probably wondering when the HomeBuilder grant will be paid. Here are the possibilities:

  • For new builds / land and construction: at the discretion of your state and territory, but generally at slab stage or in line with first home owner grant payments

  • For renovations: after $150,000 of the contract price has been paid

  • For off-the-plan: possibly during total payment at settlement.

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The National Partnership Agreement
Each Australian state or territory has to sign the Commonwealth Government’s National Partnership Agreement to provide HomeBuilder to residents. HomeBuilder is currently being considered by all states and territories.

When your state or territory begins accepting HomeBuilder applications, they will backdate acceptance to 4 June 2020. That means that you can apply in relation to eligible contracts that were entered into from 4 June 2020 to 31 December 2020.

Ready to Apply?
You will be able to apply for HomeBuilder through your state or territory’s revenue office (or equivalent authority) once the state or territory signs the National Partnership Agreement.

Have these documents at the ready so you can apply for HomeBuilder as soon as it becomes available in your state or territory:

  • Proof of identity

  • Proof of taxable income

    • TIP: Prove your taxable income with your notice of assessment, which is issued by the ATO once your tax return for an income year is processed. Taxable income is the amount of income you pay tax on (your gross income less allowable deductions). Find out more here.

  • Copy of signed and dated contract (by you and the builder)

  • Copy of builder’s licence / registration

  • Copies of other relevant documents, e.g. council approvals.

You can register to receive updates when more information is available on the Treasury Coronavirus website.

Final Tips
We’ve collected some helpful tips for you to keep in mind when applying for HomeBuilder.

  • Act NOW! Builders and tradies will be very busy thanks to the HomeBuilder grants. Secure your workers ASAP to ensure you have enough available labour and get the best-priced quotes.

  • Overseas building material supply has been interrupted due to COVID-19, particularly for materials sourced in China. Consider locally manufactured materials to avoid delays - remember that construction must begin within 3 months of signing the contract.

  • As always, collect quotes from two or three builders before signing a contract to get the best possible price.

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