How can the average Tax return help you buy your first home? By Kym Nitschke

Completing your Tax Return can lead to an unexpected financial lump-sum payment from the government for many people. Some choose to see it as money they did not expect to receive and waste it on expensive and unnecessary purchases. But what if I told you that this money could be used to make even more money — and to purchase a new home at the same time?

The average tax refund in Australia was $2,310 for the 2016 Financial Year, and that could go a long way to helping you achieve the dream of homeownership. Many Australians don’t realise that a 20% deposit isn’t always required. Some banks require as little as 3-5% plus stamp duty and legal costs on the purchase price of the house.

 If you buy a $400,000 house, you may be required to put down as little as $32,000 (A $12,000 Deposit plus $20,000 in Stamp Duty and Legals). Your Tax refund can go a long way towards helping you achieve this goal. Don’t forget that depending on which state you live in, you may be eligible for a First Home Owners Grant or concessions on Stamp Duty. Each state has a different policy on the First Home Owners Grants and Stamp Duty Concessions. Please see a list below which outlines each state’s policies:

First Home Owners Grants

State

Amount

Conditions

ACT

$7,000

New or substantially renovated home for homes $750,000 or less

NSW

$10,000

Purchase of new home valued up to $600,000

Construction of new home valued up to $750,000

Victoria

$20,000

Purchase or build a new home valued up to $750,000

Queensland

$15,000

Purchase or build a new home up to $750,000

WA

$10,000

Purchase or build a new home up to $750,000 for  properties located south of the 26th parallel of south latitude

Purchase or build a new home up to $1,000,000 for properties north of the 26th parallel of south latitude

SA

$15,000

Purchase and construction of new home valued up to $575,000

TAS

$10,000

Purchase or build  a new home

NT

$26,000

Purchase or construct a new home with no limit

State          

Stamp Duty Concessions

ACT

Purchase Value

Concessional Duty Payable

Condition

 

$ 455,000 or less

$20

Minimum Duty

 

$455,001 to $585,000

$13.60

for each $100 or part thereof by which the dutiable value exceeds $455,000

 

$585,000 or more

 

No concession

 

Vacant land $272,200 or less

$20

Minimum Duty

 

Vacant land $262,201 to $317,600

$13.55

for each $100 or part thereof by which the dutiable value exceeds $262,200

 

Vacant Land $317,600 or more

 

No concession

NSW

Purchase Value

First Home – New Home Duty

 

$650,000

$0

 

$660,000

$2,090

 

$670,000

$4,190

 

$680,000

$6,290

 

$690,000

$8,390

 

$700,000

$10,490

 

$710,000

$12,590

 

$720,000

$14,690

 

$730,000

$16,790

 

$740,000

$18,890

 

$750,000

$20,990

 

$760,000

$23,090

 

$770,000

$25,190

 

$780,000

$27,290

 

$790,000

$29,390

 

$800,000

No Discount

QLD

Purchase  Value

Concession

 

Up to $504,999.99

$8,750

 

$505,000 to $549,999.99

Concessions of between $7,875 and $875

 

$550,000+

No Concession

 

Vacant land $250,000 or less

100% of transfer duty

 

Vacant land $250,001 to $399,999.99

Concession of between $7,175 and $525

WA

Purchase Price

Grant/Concession

 

Less than $430,000

Exempt from stamp duty

 

$430,000 to $530,000

Duty at a rate of $19.19 for every $100, or part of $100, by which the value exceeds $430,000

 

$530,0001 or more

No concession or exemption

 

Vacant land less than $300,000

Exempt from stamp duty

 

Vacant land $300,000 to $400,000

Duty at a rate of $13.01 for every $100, or part of $100, by which the value exceeds $300,000

 

Vacant land $400,000 or more

No concession or exemption

SA

Purchase  Value

Concession

Condition

 

$500,000 Valued Property (apartment)

Eligible

Purchase of a new or substantially refurbished apartment

By implementing these tips and tricks, you could be well on your way to purchasing your first home.

Alternative Options

If you decide not to put this money towards a house deposit, a couple of other great options would be to pay off any non-deductible debt you may have, such as credit card debt or personal loans, as the interest rates on these types of loans are often very high (and you get no tax break for having them, unlike a home or other deductible debt). It is also a great idea to have an emergency savings fund, as you never know what life may throw at you such as car repairs or medical appointments that can be quite costly. Whatever decision you decide to make, enlisting the help of a trusted financial planner and accountant is a great idea.