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
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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.