ASSISTANCE FOR HOMEBUYERS The impact of rising property values and higher interest rates is making home ownership a greater challenge across Australia, particularly for first home buyers. In recognition of this, the Bracks Government announced assistance during the 2006 State Election worth around $539 million over the next five years for Victorians purchasing a home. First Home Bonus The Bracks Government announced an extension of its First Home Bonus scheme during the 2006 State Election, which includes: • extending the $3000 First Home Bonus for buyers of existing properties until June 2009 (from June 2007); and • increasing the Bonus to $5000 for all first home buyers of newly built homes, commencing 1 January 2007. The Bonus, in both forms, is available for properties valued at or below $500 000 and purchased as a principal place of residence. The current $3000 Bonus brings to $10 000 the grants available to first homebuyers purchasing existing premises, while those first homebuyers purchasing newly constructed premises will receive $12 000. Since its introduction in May 2004, over 100,000 first homebuyers have received the Bonus. This is the only scheme in Australia which offers a cash bonus on top of the $7000 First Home Owners Grant. Highlighting the success of the scheme, Victoria has the highest proportion of home buyers that are first home buyers. Conveyance duty reductions for homebuyers The Bracks Government has already implemented reforms making home ownership easier for Victorians. These include the First Home Bonus, abolishing stamp duty on mortgages and expanding concessions for home buyers. In recognition of rising property values, the Bracks Government reduced the conveyance duty payable on eligible principal place of residence transactions during the 2006 State Election. Conveyance duty has been reduced for properties valued between $115 000 and $500 000 purchased as a principal place of residence. The duty payable was reduced as follows: • the duty rate was cut from 6 per cent to 5 per cent for properties valued between $115 001 and $400,000; and • the duty payable was cut by $2850 for properties valued between $400,001 and $500,000. The reduction took effect for contracts entered into on, or after, 1 January 2007. The conveyance duty reductions will save home buyers $305 million over five years. The assistance is deliberately targeted to those home buyers who need it most: those Victorians buying a home for themselves and their family to live in, and for purchases below $500,000. Reflecting this, the largest percentage reduction in conveyance duty will be enjoyed by purchasers of homes around the median Melbourne price. The rate cut delivers a saving of around $2760 on the purchase of a median-priced home, which represents a 14 per cent cut in duty payable. To ensure that the duty reduction is only available to genuine homebuyers, there are some eligibility criteria that must be met. These include an age limit of at least 18 years, a requirement to commence occupation of the home within 12 months of settlement, and a requirement to occupy the home for a continuous period of at least 12 months. However, the Commissioner of State Revenue will have discretion to allow exceptions to the age and residency requirements to prevent inequities that may arise in certain situations, such as a genuine home buyer under the age of 18 years, legitimate temporary absences or where a home becomes unfit for occupation. First home buyers will have a choice between the conveyance duty reduction or the First Home Bonus. However, the Bonus will always be more generous to give first home buyers an edge in the market. Coupled with the extension of the First Home Bonus, these new measures will benefit around three quarters of all Victorian home buyers. Concessions for pensioners and concession cardholders The Government expanded its conveyancing duty assistance to pensioners and concession cardholders in the 2006-07 State Budget. From 1 July 2006, the threshold for a full conveyance duty exemption was increased from $250,000 to $300,000 and the threshold for a partial exemption was increased from $350,000 to $400,000. Pensioners and concession cardholders also benefit from the reduction in duty for principle places of residence purchases. As a result of these changes, a pensioner or concession cardholder purchasing a home worth $300,000 will save $11,180 in conveyancing duty. If a pensioner/concession cardholder is also a first home buyer they can choose to take either the conveyance duty concession or the First Home Bonus. They are still eligible for the Government’s $7000 First Home Owners Grant.
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