Is it worth buying a home just for the FHOG and SD exemption?

[tigerGT]

Hi,

I know this question may seem so silly to some. Why would somenoe spend a large sum of money just for these benefits of 7k and SD exemption.

Ofcourse there is more reasons such as long term acquisition of several IP's and being comfortbale in the future. And that is ultimately my long term goal however;

This is the position i am in. I already own a IP. My fiance who i am marrying in september does not. We do not live together. Not untill we wed anyway. Therefore if she was to purchase a house now we would get the 7k grant and not have to pay SD ( house will be less than 500k). It will be in her name only.

I am currently looking for another IP so as to not waste this opportunity. Once we get married she will be my partner officially and she would not be entitled to this.

We currently have enough for a deposit on a IP. I am looking at something with 5% yield in outer sydney suburbs. The only question in my head is should we just continue saving for now and just purchase a property once i we hAVE A healthier deposit

The other side of the arguemnet is if there is a 5% home value drop as some agencies suggested late last week then the benefits of the FHO policies would be ruled out with this drop so i would have been better to continue saving.

I guess this is a tough one but what would you do?

 

[-T-]

Hey tigerGT

This is probably no help... but if I could go back in time, I would sacrifice the FHOG (didn't get SD concession back then) and buy my first property in my trust. I don't plan to sell, so no CGT issue, but I think the Land Tax and loss of FHOG would be outweighed by the benefits. Everyones' situations are different though, that's just me.

However, the FHOG and SD concession is free money. So if it works with your strategy, if you have a good deal, and have a good feeling, I'd go for it.

 

[skater]

If she is happy to live in the IP for the time it takes to qualify, & you intend on purchasing a property anyway, then it could be a good strategy.

 

[Simon]

Have you owned a home before?

it is a common misconception that owning an IP means you cannot get the FHOG.

If the IP was bought after July 2000 and you never lived in it then it doesn't count against the FHOG.

Calculate how much you need to earn, after tax, to match the FHOG and SD exemption and work out for yourself if it is worth it.

Cheers,

 

[tigerGT]

hi

OK sounds good guys.

I think i will have to save for 6 months with my fiance in order to save around 15k which equated to fhog and sg exmption. I guess i will keep looking and hope i find a bargain in the meantime. If i do not i would rather save for 6 months especially considering that most suggest the market hasnt even bottomed out yet..

thanks for the tips guys
G

 

[Nanuq]

have you consulted your solicitor about OSR's point of view about your current marital status?

Do you have joint accounts or any other relationship with your partner that OSR would look at?
I know the biggest test for a de facto relationship is that you are living together, but I am not sure about the weighting of other factors in their considerations.

 

[tigerGT]

Hi

I have been advised that they look for whether the couple has had joint accounts.. Even as far as looking for transfer between accounts. I have made sure that I have never done either.

1. We do not live together and never have
2. No joint accounts
3. Have never transfered between accounts.
4. cant think of anything else.

Probably a good idea though to check with solicitor. thanks

 

[brettb]

it is a common misconception that owning an IP means you cannot get the FHOG.

If the IP was bought after July 2000 and you never lived in it then it doesn't count against the FHOG.

Cheers,

To clarify, does this mean I can buy an IP with savings as deposit and then later buy a PPOR with the FHOG as deposit?

Cheers,
Brett

 

[wish-ga]

Why would somenoe spend a large sum of money just for these benefits of 7k and SD exemption.

Tiger I hear what you are saying. It is like having a baby for the "baby bonus", the long run average says that you are gonna be out of pocket.

Back to the house question: I was saving to buy a place to live in and hopped in before the FHOG offer was phased out. FHOG did not make me decide to buy a place. It was a welcome contribution but I would have achieved the purchase without the help - eventually

BUT if you have done the numbers, like lots of people on this site, and discovered that it is better for you to buy ip and rent somewhere to live then stick with that.

 

[Simon]

To clarify, does this mean I can buy an IP with savings as deposit and then later buy a PPOR with the FHOG as deposit?

Cheers,
Brett

Yes - but you may forfeit the SD exemption - which can be worth more.

I reckon that getting upwards of $20K tax free (if buying a house in Sydney) is worth occupying the property for 6 months, but that is just an opinion only. You will also be able to have the CGT exemption as well.....

 

[noviceproperty]

Simon,

Can you clarify that the FHOG is for first PPOR and that SD exemption is only for first owned property (whether IP or PPOR)?

Also, is their any truth that there is another grant for new properties (on top of the $7k)?

Thanks.

ps - this is a really great thread. Thanks all.