2 Q's re: 1st Home Owner Grant / Moving out of home

[Platypus]

I'm a current property investor living at home with the folks but am ready to take the plunge and finally move out! But I have 2 main questions to ask:

1. My parents purchased some vacant land in the 1990s and included my name in it. Then in 2004, I bought my own investment property... so I've always thought that I wasn't eligible for the First Home Owner Grant. But after some research, I've discovered that I might be eligible afterall considering that i) there is no property on the vacant land, and ii) I've never lived in my investment property. Would this be correct?

2. I'm single, earn around $60,000 a year (of which I don't spend much), owe about $185,000 on my current investment loan, and am now wondering whether it's a smart idea to get another loan and purchase a cheap studio apartment (under $200,000) to live in (and potentially get the First Home Owner Grant). I've managed to pay off $100,000 off my investment property loan in a little over 4 years and at that rate, could potentially pay it off in 5 years with the interest getting lower as I put more in. BUT, if I go and get another loan of $200,000, then I'd be paying a hell of a lot of interest so it would hardly leave much for extra repayments. So am wondering whether people think it's a good idea or if there are any alternative solutions/suggestions?

 

[vbplease]

This should answer your first question.. its from the FHOG website..

You and your spouse must not have previously held an interest in residential property in Australia on or after 1 July 2000 in which you or your spouse have resided (Ownership of an investment property after 1 July 2000 will not prevent you from obtaining the Grant provided you have NOT lived in the home)

For your second question - why do you want to pay down your debt? I think you need to establish your investment stratergy first.

 

[marg4000]

Check it out, but I think that if you owned property prior to 2000 i.e., you name is on the title, (you said purchased in the 1990s) then you are not eligible for FHOG.
Marg

 

[Platypus]

The govt website says "Vacant land is not regarded as residential property for the purposes of First Home Owner Grant" so if I were to just read that, then I should be eligible. But as Marg points out, would this also apply to vacant land purchased in the 1990s - does anyone know? It would be a bummer if I can't get the grant because my parents just bought the land and added my name to it without me having much to do with it.

As for the 2nd part vbplease, just wondering what you mean by it not being a good thing to "pay down" the debt"? Ru saying it's not a good thing to add any extra $ I have into the loan? The only reason I do that is to try to reduce the interest amount as much as possible because it eats away most of the $ I pay into it. Someone mentioned the idea of an offset account so I'm wondering if this is what u mean and if this is a good idea?

 

[vbplease]

Platypus, the key is that you havn't resided on the land - so you should be ok.

You and your spouse must not have previously held an interest in residential property in Australia on or after 1 July 2000 in which you or your spouse have resided

Thats right, there is not much point in paying down the principle of the loan, unless serviceability is an issue i.e. if you are touble making the repayments. The best way is putting excess money into an offset account so it is free to be used as you wish, while reducing the interest you pay.

 

[Jacque]

Hi Platypus

Ring the osr NSW and you'll get your answer pretty quickly. From the information you've provided, it seems that you are still eligible, as land is treated differently. Always good to check, however, with the right sources

http://www.osr.nsw.gov.au/about/contact/

 

[yo yo ma]

I've managed to pay off $100,000 off my investment property loan in a little over 4 years and at that rate, could potentially pay it off in 5 years with the interest getting lower as I put more in.

Have you considered an interest only loan with a offset account to maximise you tax deductions?