According to the Australian Treasury and as per Prime Minister Scott Morrison’s announcement HomeBuilder program provides eligible owner-occupiers (including first home buyers) with a grant of $25,000 to build a new home or substantially renovate an existing home where the contract is signed between 4 June 2020 and 31 December 2020. Construction must commence within three months of the contract date.. HomeBuilder will assist the residential construction market by encouraging the commencement of new home builds and renovations this year.
Eligibility To Access HomeBuilder
Owner-occupiers must meet the following eligibility criteria:
• you are a natural person (not a company or trust); • you are aged 18 years or older;
• you are an Australian citizen;
• you meet one of the following two income caps: $125,000 per annum for an individual applicant based on your 2018-19 taxable income or later; or $200,000 per annum for a couple based on both 2018-19 taxable income or later.
• you 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; 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 (house and land) does not exceed $1.5 million (pre-renovation);
• construction must commence on or after 4 June and within three months of the contract date. Process and timing HomeBuilder will be implemented via a National Partnership Agreement with state governments. This approach will utilise existing State and Territory mechanisms to distribute the HomeBuilder payments. When the States and Territories begin accepting HomeBuilder applications, they will backdate acceptance of these applications to 4 June 2020.
Case Study 1
First home buyers Emma and Liam decide to purchase a house and land package Emma and Liam enter into a house and land contract for $550,000 on 25 September 2020. Emma and Liam’s bank applies on the couple’s behalf to the relevant State or Territory State or Territory to receive the HomeBuilder $25,000 grant.
The State or Territory conducts the eligibility checks and reviews the couple’s documentation and confirms that both Emma and Liam are Australian citizens, over the age of 18, have a combined taxable income under $200,000 based on their 2018-19 tax return and the value of the contract is under the $750,000 contract price cap. As the couple are both first home buyers, Emma and Liam may also be entitled to their State’s first home owner grant and stamp duty concessions as well as the Commonwealth’s First Home Loan Deposit Scheme and First Home Super Saver Scheme.
Case Study 2
Owner-occupier Cassidy decides to substantially renovate her home Cassidy enters into a contract on 31 December 2020 to substantially renovate her home, with renovations valued at $400,000. The value of her home is $900,000 (this includes the value of the house and the land). Cassidy pays the builder $150,000 of the cost of renovation of her home on 2 February 2021. Cassidy then applies directly to her State or Territory to receive the $25,000 HomeBuilder grant. The State or Territory conducts the eligibility checks and confirms that Cassidy owns the property, is an Australian citizen, over the age of 18, and has a taxable income under $125,000 based on her 2019-20 tax return. The State or Territory also confirms the value of the renovations is between $150,000 and $750,000, and the value of her home (house and land) is less than $1.5 million pre-renovation, and Cassidy has made a payment of at least $150,000 for the renovations. The State or Territory approves the application. As Cassidy already owns her own home, she is not eligible for the first home owner grant, the First Home Loan Deposit Scheme or the First Home Super Saver Scheme.
Case Study 3
Owner occupiers Jacqui and Henry decide to knock down and rebuild their existing home Jacqui and Henry enter into a building contract to knockdown and rebuild their existing home on 24 August 2020, with the knockdown and rebuild contract valued at $400,000. The value of the property is $800,000 (including the current value of the dwelling and land). Jacqui and Henry’s bank applies on the couple’s behalf to the relevant State or Territory State or Territory to receive the HomeBuilder $25,000 grant. The State or Territory conducts the eligibility checks and confirms that the couple own the property, are Australian citizens, over the age of 18, have a combined taxable income under $200,000 based on their 2018-19 tax return, and the value of their existing home and land pre-renovation is less than $1.5 million. The building contract is also within the HomeBuilder renovations price range (between $150,000 and $750,000) and the couple have made payments of at least $150,000 for the contract price. The State or Territory approves the application. As Jacqui and Henry already own their own home, they are not eligible for the first home owner grant, the First Home Loan Deposit Scheme or the First Home Super Saver Scheme.
Case Study 4
Owner-occupiers Carla and Andrew decide to build a new home on a vacant block Carla and Andrew decide to build a new home on a vacant block of land that they already own. The value of the vacant block is $400,000 and the building contract that Carla and Andrew sign is for $300,000. Carla and Andrew enter into the building contract on 4 July 2020 and make the first progress payment when construction commences on 2 August 2020. The State that Carla and Andrew live in signs the HomeBuilder National Partnership Agreement on 23 August 2020 and starts to receive HomeBuilder applications through the State or Territory on 27 August. Carla and Andrew apply for HomeBuilder via the relevant State or Territory which conducts the eligibility checks and confirms that both Carla and Andrew are Australian citizens, over the age of 18, have a taxable income under $200,000 based on their 2018-19 tax returns, the value of the property (house and land) is less than $750,000, the contract was signed on or after 4 June 2020 and before 31 December 2020, and they have made the first progress payment.
The State or Territory approves the application. As Carla and Andrew are not first home buyers, they are not eligible for the first home owner grant, the First Home Loan Deposit Scheme or the First Home Super Saver Scheme. Owner-builders are ineligible for HomeBuilder. Investment properties are ineligible for HomeBuilder. In negotiating a building contact, the parties must deal with each other at arm’s length. This means the contract must be made by two parties freely and independently of each other, and without some special relationship, such as being a relative. The terms of the contract should be commercially reasonable and the contract price should not be inflated compared to the fair market price. Renovations or building work must be undertaken by a registered or licenced building service 'contractor' (depending on the state or territory you live in) and named as a builder on the building licence or permit. Last updated: 18 June 2020 4 The renovation works must be to improve the accessibility or safety or liveability of the dwelling. It cannot be for standalone granny flats, swimming pools, tennis courts, and structures that are not connected to the property (i.e. outdoor spas and saunas, sheds or standalone garages). HomeBuilder will be non-taxable - consistent with existing state and territory first home owner grant programs.
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