Fhog

[Bayside]

I'm looking at buying my first property, i'd like to get the FHOG but don't want to live in the Property. Is it possible to recieve the grant and then just leave the house vacant for 6 months while doing some work on it or do I need to actually live in the House? I would have electricity on so I could run power tools
Thanks

 

[toony]

Do you mean FHOG or FLOG?

 

[Peter_Tersteeg]

You are required to live in the property for at least 6 months and you must move in within 12 months of settlement. There are substantial legal and monetary penalties if you don't do this.

Keep in mind, if you purchase an investment property and don't claim the FHOG, you will probably still be eligible for it when you do purchase your own home.

 

[Craig-G]

Hi Bayside,

I think it largely depends on your risk level and ethical position - i.e. are you comfortable bending the rules. I would say look into the checks that will potentially be done (i.e. are the bills in your name, is your post sent there etc etc). If you are comfortable that you can pass all of these tests, then it would be extremely unlikely that you will be found out.

Anyway, if the house is vacant and you have everything hooked up in you name and you are there doing reno's and you don't have your name on a lease anywghere else then it sounds like you have a strong arguement to suggest you are indeed living there?

Lets just hope they don't track IP addresses from investment forums ; )


Craig

 

[Peter_Tersteeg]

Hi Bayside,
I think it largely depends on your risk level and ethical position - i.e. are you comfortable bending the rules. I would say look into the checks that will potentially be done (i.e. are the bills in your name, is your post sent there etc etc). If you are comfortable that you can pass all of these tests, then it would be extremely unlikely that you will be found out.

The risk is reasonably low - you've got good odds of getting away with it if you're cunning.

On the flip side, the penalty is you'll loose the grant, you'll pay a fine similar in value to the grant itself and you'll potentially have a criminal fine against your name.

IMHO it's not really worth a few grand.

 

[Boyler_Room]

As PT Bear said, it's not worth the risk and if you don't claim the FHOG on this property and use it as an IP, then you'll still be eligible to claim it when you do finally get yourself a PPOR.

Why take the risk doing something illegal when it's so easy to do things well within the law?

Cheers
BR

 

[tobe]

Thats why Im a property investor and not a cat burgular. Theres no money in cats these days anyway....

 

[Boyler_Room]

Meow. Too many cats. Oversupply!! Much like the rabbit situation in China... resulted in the Great Wall, I hear.

 

[merlin]

The FHOG is heavily policed...from the first article:

INSPECTORS are uncovering at least five first-home-buyer cheats each week as Melbourne's housing affordability crisis worsens.

About 400 rorters in the past year have been forced to pay back a total of $3.7 million in falsely collected First Home Owner Grants.

I wouldn't risk it!!

http://www.news.com.au/heraldsun/story/0,21985,24191380-2862,00.html

http://www.theage.com.au/news/natio...recoup-millions/2005/06/21/1119321737630.html

http://www.theage.com.au/news/natio...pay-5m/2006/06/03/1148956587906.html?from=rss

 

[contrary]

3 options :

1. Buy property as PPOR : get FHOG and stamp duty exemption and remain living in it-no CGT on resale
2. Buy property as IP : you can get FHOG later but exclude yourself from getting stamp duty exemption. You can negatively gear the property from day 1
3. Buy property as PPOR and live in it for 6 months then convert to IP : you get FHOG, stamp duty exemption and after 6 months negatively gear the property. In addition if you sell within 6 years you may also be CGT exempt

The stamp duty exemption is worth 30k on a 500k property. As far as I am aware you are not eligable for the stamp duty exemption after you have bought a property ie if you buy an IP first you are not able to get the stamp duty exemption on your PPOR when you buy this later. The FHOG is only 7k. Inflation erodes the value of the FHOG and stamp duty exemption over time.

If you use the FHOG and stamp duty exemption it is effectively a free transaction.

Check all this with the ORS (office of state revenue) and give them a ring if this is unclear.