The Federal Government has now formally announced the $680 million HomeBuilder scheme, granting eligible owner occupiers a tax free grant of $25,000 towards the build of their new home or to substantially renovate their current home.
The grant applies only to the building of works on properties owned as the applicant’s principal place of residence, excluding the application of the grant on secondary or investment properties. The HomeBuilder scheme will be available to eligible applicants until 31 December 2020.
The primary aim of the scheme is to stimulate employment in the residential construction sector, one of the largest employment sectors in the country, with the Government expecting around 30,000 homeowners and builders to benefit from the grant.
While the scheme has been welcomed by many, there has been level criticism due to the tight eligibility criteria. The Federal Opposition suspects the scheme will fail to provide the stimulus and suggests such funds should have been applied to other areas, including upgrading social housing.
In order to be eligible to receive the $25,000 grant, applicants must:
be a natural person, not a company or a trust;
be over the age of 18;
be an Australian citizens;
if single, have a taxable income of less than $125,000 per annum based on their 2018-19 tax return or if a couple, have a taxable income of less than $200,000 per annum based on their 2018-19 tax return;
have entered into a building contract between 4 June 2020 and 31 December 2020 whereby construction of works commence on the applicant’s principal place of residence within 3 months of the date of the contract; and
carry out building works that meet the following requirements:
for a new build, the full value of the completed property, including land value, must not exceed $750,000; or
for renovations, the value of the property prior to the renovations must be less than $1,500,000 and the applicant must spend between $150,000 and $750,000 on renovations that improve the accessibility, safety or liveability of the home. The grant cannot be used to build additions outside of the home such as swimming pools, tennis courts, outdoor spas, saunas, sheds or separate garages.
The Government has included further restrictions to minimise the likelihood of the scheme being misused. For instance, all works need to be conducted by a registered builder and any contract entered into must be at arm’s length. The terms of the contract should be commercially reasonable and the contract price should not be inflated compared to the fair market place. For those who are concerned the builder has unfairly increased their price as a direct result of the scheme, the amount of a quote can be compared to those for similar works as at July 2019.
Eligible applicants are not yet able to apply to the scheme. This is because the scheme is to be implemented via a National Partnership Agreement, signed by the Commonwealth and State and Territory governments. Once the NSW Government signs the National Partnership Agreement, applicants will be able to apply for the scheme through the website of Revenue NSW.
Although an application form is not yet available, we suspect applicants will be required to submit proof of identity, a copy of the signed and dated building contract, copy of their 2018-19 tax return, evidence of the builder’s registrations, council approvals (if applicable), occupation certificates (if applicable) and evidence of land value (in the case of new homes).
Henry William Lawyers can assist with any property related enquires. Please contact the following Lawyers:
Ron Zucker +61 410 590 111
Vincent Tripodina +61 408 228 108
Chelsea Woodward +61 404 065 899
Anna Polhill +61 431 174 352