While every buyer of property is different, we always appreciate the stories told to the College with a “different” scenario with follow up questions. One such question was posed recently: Is a first home buyer entitled to the government exemptions and schemes if they have previously inherited a property through a will?
There are two different schemes that a first home buyer may wish to access:
1. The First Home Owner Grant (New Homes) scheme, was established to assist eligible first home owners to purchase a new home or build their home by offering this grant.
The grant amount is determined by the date of the eligible transaction. This is the date of the contract to purchase a new home or contract to build a home. For an owner builder, the eligible date is when the building work commences.
From 1 July 2017, the First Home Owner Grant Cap for new home purchases is $600,000; and for a property where you enter into a contract to build, or are an owner builder the total value cannot exceed $750,000.
For eligible transactions made on or after 1 January 2016, the grant amount is $10,000.
For eligible transactions made between 1 October 2012 and 31 December 2015, the grant amount is $15,000.
2. The First Home Buyers Assistance scheme which provides eligible purchasers with exemptions on transfer duty on new and existing homes valued up to $650,000 and concessions on duty for new and existing homes valued between $650,000 and $800,000.
Eligible purchasers buying a vacant block of residential land to build their home on will pay no duty on vacant land valued up to $350,000, and will receive concessions on duty for vacant land valued between $350,000 and $450,000.
Both of these schemes have criteria which includes that a first home buyer must be an eligible person and must not have at any time owned (either solely or with someone else) residential property in Australia other than property owned solely as trustee or executor.
Where a first home buyer is applying for either of these schemes, and they have inherited property through a will, the structure of that inheritance will make a difference. If they were the executor only and sold the property to disburse funds to the trustees, then the executor is not considered to have owned that house or property in their own right and may still be able to access the first home buying schemes. If however the property has been placed into the names of the trustee or trustees and those trustees apply for the first home owner schemes, they will more than likely find that they will not be entitled to the exemption or reduction in stamp duty or the first home buying grant as they have owned property in their name.
It is not the definition of buying but the definition of ownership that counts. Should you as an agent get questions regarding inherited properties and the first home buying schemes, you should always direct the purchasers to a solicitor to make further enquiries. If you are dealing with an executor of an estate who is debating between selling the property and disbursing funds versus putting the property into the trustees name for them to sell, again they should be directed to a property solicitor because the decision they make may have an impact on what access to government grants that the trustee may have in the future.
If you would like more information about property or you have a question regarding property, contact the Australian College of Professionals today on 1300 88 48 10 or get in touch online.