This month’s Victorian state budget saw an increase to the First Home-Owner Grant, but the First Home-Owner Boost will be scrapped from January 2010. However, the First Home Bonus and will First Home-Owner Regional Bonus will continue.

The grant

Victorians entering into contracts to buy their first home from 1 July, will receive an additional grant of $11,000 for new homes, and $2,000 for existing homes. This takes the full grant to $18,000 (new homes) and $9,000 (existing homes), for the 2009-10 financial year.

While the grant will continue not to be means-tested, after 1 January 2010 it will be restricted to homes costing less than $600,000 (currently there is no price restriction).

The bonus

The First Home Bonus will also be changed. Currently, first home buyers may also be entitled to an additional $3,000 (existing homes) or $5,000 (new homes) - provided the house costs less than $500,000.

For contracts entered into from 1 July, the bonus drops to $2,000 for established homes, but jumps to $11,000 for new homes, while the property purchase-price ceiling rises to $600,000.

The regional bonus

On top of the First Home Bonus, buyers in regional Victoria may also qualify for the First Home-Owner Regional Bonus. However, this only relates to new houses, not existing ones.

Currently, those buying their first (new) house may qualify for an additional $3,000 bonus (which is on top of the $5,000 First Home Bonus). However, from for contracts entered into after 1 July, an additional $4,500 bonus is also available (again, this will be on top of the $11,000 bonus).

For a full list of eligible Victorian regional municipalities, go to: http://www.sro.vic.gov.au/sro/srowebsite.nsf/taxes_firsthome_bonus_regional.htm

The boost

This is another payment for which first home buyers may qualify - but not for long. While it’s a Federal Government initiative, the Victorian Government administers the scheme.

Currently, the boost offers an extra $7,000 (existing homes) and an extra $14,000 (new homes).

However, for contracts entered into from 1 October to 31 December, the amounts halve. The scheme will then be scrapped in 2010, so Victorian first-home buyers entering into contracts from 1 January will not have access to the First Home-Owner Boost.

While the boosts, bonuses and grants are helpful to first-home buyers, you should not time buying your first home solely upon the dates above. As with any investment - but particularly as this will be the single largest for most people! - you should take your whole financial situation into account. If you would like help understanding the impact of buying a home on your overall financial situation, contact Summerhill Financial Services.

Source: Victorian Government, State Revenue Office http://www.sro.vic.gov.au/sro/srowebsite.nsf/rebates_fhog_overview.htm

Table: Summary of Potential Payments

Tags: First Home Buyer