"$7,000 Grant"

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From: Glenn M


I hope someone out there can help me!!!

Firstly, what banks will enable us to use the $7,000 grant as a deposit?
Secondly and more importantly, do banks allow you to set up an investment loan for the property you are about to purchase using the $7,000 grant deposit? (i.e. interest only).

GlennM.
 
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Reply: 1
From: Mike .


Hi Glenn,

I'm not a banker so I'll just apply some old fashioned logic here:

"Firstly, what banks will enable us to use the $7,000 grant as a deposit?"

For purchase of an existing dwelling, payment will be made at settlement, which is far too late to use the grant as a deposit.

"Secondly and more importantly, do banks allow you to set up an investment loan for the property you are about to purchase using the $7,000 grant deposit? (i.e. interest only)."

Firstly, an investment property that will not be used as the "principal place of residence" does not qualify for the grant, and secondly, the grant can't be used as a deposit since it is received no earlier than settlement.

Having said that, I believe you can purchase the property with an IP interest-only loan, live in it yourself for 3 months minimum to qualify for the grant, then rent it out and treat it as an IP from then. Once the grant is received, use it to pay down any LOC or use as deposit for next IP.

Regards, Mike
 
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Reply: 1.1
From: Michael G


Hi

"For purchase of an existing dwelling, payment will be made at settlement, which is far too late to use the grant as a deposit."

Would "$1 down and $6999 deposit payable x days after settlement" work ?

Regards
Michael Gruber
 
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Reply: 1.1.1
From: Ian Parham


'Evening Glen, Mike & All

If you haven't already done so, please read the thread below titled:
'Another FHOG Question' in relation to grant for an IP scenario.

I'm afraid I am not certain about the 'three months' qualifying period after settlement though.

Cheers Ian
 
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Reply: 1.1.1.1
From: Glenn M


So is there anyone out there that has actually set up an interest only loan whilst using the $7,000 Grant?


Thanks,


GlennM.
 
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Reply: 1.1.1.1.1
From: P Plate


I believe the grant is only available if you intend to occupy the house, - and not available for IP
 
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Reply: 1.1.1.1.1.1
From: Robert Forward


Alright guys.

The $7k IS available for anyone who intends on living in the property within the first 12 months of purchase. In other words you can buy it with a tenant in place and get the $7k as long as you move into the property within the first 12 months.

There currently is no limit on how long you must stay in the property. But I'd say it would be advisable to change utility bills over to your name to prove you had lived in the property within that time.

So to me, yes you can get the $7k for an IP you just need to be careful and creative on how you do it. One of the best ways would be to spend a few weeks in it to renovate. This way you do three things, you up your rentability and add value to the property plus you get the $7k grant, what could be better.

See how simple it can be. Just check with your own qualified advisors though.

Cheers
Robert
 
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Reply: 1.1.1.1.1.1.1
From: Ian Parham


Thanks Robert.

This was my understanding also, although to date I have not been able to supply absolute confirmation.

Cheers Ian
 
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Reply: 1.1.1.1.1.1.1.1
From: Glenn M


Sorry, this must be a silly question....So therefore, the bank will not have any reservations in setting up an interest only loan under these circumstances. Would they report this through to the ATO as it seems that the intention of the purchaser all along was to use the property for investment purposes?


GlennM.
 
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Reply: 1.1.1.1.1.1.1.1.1
From: Robert Forward


These days banks don't separate and investment loan to a owner occupier loan. Correct me if I'm wrong Rolf.

You can take out any normal standard, or even non standard loan and use it for what ever you want in the way of purchasing. The banks dropped this separation of investment and owner occupier loans a number of years ago.

And in so far as the ATO is concerned, it's what you do with the loan (monies) that they would be worried about. You need to advise them that it is for an investment property.

Now with the above, for that period that you move into the property to qualify it for the FHOG you will not be able to claim any tax deduction on the loans interest as it has been turned into you PPR not an IP. So that is another small loss that you should be aware of.

Cheers
Robert
 
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Reply: 1.1.1.1.1.1.1.1.1.1
From: Owen .


Hi Robert,

I think I've read this in another post but what it you already own an investment property and then wish to buy your own home? do you still qualify?

I had a quick look at the FHOG site and it said that you cannot previously have owned a "home". An IP is not a "home", it's an investment property.

If this is so then I have a friend and his wife who it could help. They own an IP together but still rent themselves. They could buy 2 other properties in there individual names, move in to each and switch the utilities etc over to their names in the first 12 months sometime to qualify for the $7k or $14k, renovate if required (good idea), move out and rent them again for another 6 years and sell them both with no CGT. As long as they stay renting themselves then this could work a treat.

What do you reckon?

Owen
 
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Reply: 1.1.1.1.1.1.1.1.1.2
From: Sergey Golovin


Dear Glenn,

1. Please read the archives. That is why they are there for.
Hips of it (FHOG & alike) were written down and discussed already.
We understand you are hot, confused and in hurry to start. Do not worry grant has not been cut off as yet (31 December, they say).

Cut it shot -

2. Investment Property as well as Investment Loan and Grant do not mix.
You will not get the grant from the Government.

Investment - No grant. Personal - Yes grant.

You simply need owner occupy to start with if you want to live there. You can switch them over to Investment at no cost at all, when you are ready.

And vice versa. If you want investment first you have to wait till you actually move in your self and occupy that place.

“Investment Loan” first and transfer it into “Owner Occupy” at no cost at all, yes can be done.
But you have to occupy that place within 12 month. That's all. Other wise you will not get the GRANT.
To keep it simple word Investment for the Government and ATO in particular means - Investment, funny enough.

3. You can have “Interest Only” or “Principle & Interest Loan”- no problem.
Government does not care what is your arrangement with the bank. They are not in the business to provide the finance. They only provide the GRANT!
Grant means help (temporary relive) - that's all.

4. Now, on the question of the Deposit:
Same banks as well building companies (No deposit and no legals...) they do incorporate that grant into the deposit (kind of deposit) for you. They will claim that grant on your behalf. You won't even see that money. All you have to do is to sign the bloody papers.

That question was answered just three days ago! Did you read it?...

Wait there is more -

http://www.revenue.act.gov.au/FHOG/faqs.html

Read it carefully and I hope, I really do hope, it will help.

Serge.
 
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Reply: 1.1.1.1.1.1.1.1.1.1.1
From: Sergey Golovin


Owen,

I have found it works better for me if I print large documents first and read them through from the paper carefully. But it is just me.

I am bit slow at reading. You know few bad years at school, did fall down on the head few times...I know sad, but what can you do.

http://www.revenue.act.gov.au/FHOG/faqs.html

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

http://www.osr.qld.gov.au/

http://www.treasury.sa.gov.au/taxation/overview.html

http://www.treasury.wa.gov.au/

http://www.nt.gov.au/ntt/

http://www.treasury.tas.gov.au/domino/dtf/dtf.nsf

Victorian not responding - http://www.sro.dtf.vic.gov.au/


Serge.
 
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Reply: 1.1.1.1.1.1.1.1.1.2.1
From: Glenn M


Thanks for all of the replies.


GlennM.
 
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Reply: 1.1.1.1.1.1.1.1.1.2.1.1
From: Sergey Golovin


Never mind Glenn.

Hopefully you'll buy something soon.
Be aware of the coming federal election.
They might cut the FHOG off. Do your research and move on.

Good luck.

Serge.
 
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"Re: $7,000 Grant"

Reply: 1.1.1.1.1.1.1.1.1.1.2
From: Terry Avery


Owen,

The short answer is no. A house is a home whether an IP or own home. You
will find the legislation is a bit more specific than the website. You are
playing with pedantics to say an IP is not a home.

Cheers
 
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Reply: 2
From: Victor Mann


Glenn,

Firstly if you intend to use rental income to support the loan (ie investment) you will then sign on the application an item called a Deceleration of purpose. If you are borrowing the funds (more than 50%) for business purposes then the bank will not allow you to use the grant. You will also fall outside the consumer credit code and have no protection that it provides.
 
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"Re: $7,000 Grant"

Reply: 1.1.1.1.1.1.1.1.1.1.2.1
From: Owen .


Thanks Tex. That was what I was after.
 
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