Understanding how you can leverage the HomeBuilder Scheme
16 June 2020
In recent weeks, the Australian Government and Treasury announced new measures to help the residential construction market, in the form of the HomeBuilder Scheme.
HomeBuilder is a limited time, non-taxable stimulus package in the form of a $25,000 grant for eligible owner-occupiers, including first home buyers, and can be used to build a new home or substantially renovate an existing home.
Lending & Finance Executive Managing Partner, Terry Lingard, has captured the key individual eligibility requirements in a previous article. This article will provide more detail on the types of construction that homeowners can undertake through the scheme, and how the scheme will be administered.
Eligible Building Contracts
To be eligible for the grant, the relevant contract must be signed between 4 June 2020 and 31 December 2020, and construction must commence within three months of the contract date.
Eligible building contracts include:
Contracts to build a new home as a principal place of residence, where the property value does not exceed $750,000 under the contract price cap; and
Contracts to substantially renovate an existing home as a principal place of residence, where the renovation contract is between $150,000 and $750,000, where the property value pre-renovation does not exceed $1,500,000.
All types of dwellings including houses, apartments, house and land packages, and off-the-plan, will be eligible for the HomeBuilder scheme, subject to the building contract limits set out above.
Where the construction work is for substantial renovations those works must be made to improve the accessibility, safety and liveability of the dwelling.
Ineligible Residential Construction
The HomeBuilder scheme is limited to principal place of residence properties and the scheme will not be available for anyone seeking to build a new home or renovate an existing home as an investment property.
Building contracts must be negotiated at arm’s length and be commercially reasonable. For instance, if work is undertaken at inflated contract prices when compared to the fair market value, you may not be eligible for the HomeBuilder scheme.
Building construction work or renovations must be undertaken by a registered or licenced building service contractor (as defined in the relevant State or Territory), who is named on the building licence or permit or the works will not be eligible for the HomeBuilder scheme.
Renovation works that relate to external additions to the property unconnected to the residential property will not be eligible for the HomeBuilder scheme. These include:
HomeBuilder Scheme Administration
Treasury has advised the HomeBuilder scheme will be implemented through a National Partnership Agreement between the Commonwealth, State and Territory governments, allowing for the utilisation of existing mechanisms to distribute payments to eligible applicants.
The HomeBuilder scheme is a demand driven program so the program costs are uncapped and will ultimately depend on the actual take-up by successful applicants.
Once they begin accepting applications, States and Territories will backdate applications to 4 June 2020. Further information on when and how potential applicants will be able to access the HomeBuilder scheme will be made available by the relevant State or Territory revenue authorities.
To apply for the HomeBuilder scheme, you will need to provide the following documents to the relevant State or Territory revenue authority including:
Proof of identity:
A copy of the signed and dated building contract.
A copy of the builder’s registration or licence.
A copy of your 2018-19 tax return (or later).
Supporting documents evidencing land value, council approvals, building contracts or occupation certificates.
Each relevant State or Territory revenue authority will provide further information on the specific documentation applicants will need to provide in due course.
Existing Home Assistance Schemes
The HomeBuilder scheme will apply in conjunction with, and in addition to, existing home assistance schemes in each relevant State or Territory.
The existing schemes vary between States and Territories and include, but are not limited to:
Full or partial exemptions from transfer duty on new and existing homes.
First Home Owner Grants for buying or building new homes.
Regional incentives for First Home Owner Grants.
Other State or Territory bonus payments and grants.
Each of these additional existing home assistance schemes are subject to their own laws and guidelines, and potential applicants should seek appropriate guidance on their eligibility.
Please contact the Findex Tax Advisory team for more information on the HomeBuilder Scheme.