Residents of New South Wales can now apply for the Federal Government’s tax-free $25,000 HomeBuilder grant. Announced as part of the recent COVID-19 economic stimulus package, the grant program offers a financial incentive for first homebuyers and owner-occupiers to purchase or renovate their homes.
So far, applications for the grant have exceeded expectations, with many first homebuyers combining the HomeBuilder grant with other NSW Government economic incentives to stimulate the construction sector and the economy.
Like other Government grants, this incentive is available for a limited time only and the opportunity expires on 31 December 2020. Also, access to the grant is modelled around property valuation limits.
If you are considering applying for the grant you should review the following points:
What the HomeBuilder grant can be used for
While it is a Federal Government grant, the NSW State Government is responsible for the application and distribution process.
Under the HomeBuilder rules, the grant can be used to:
- Build a new home to the value of $750,000
- Substantially renovate an existing home for between $150,000 and $750,000 where the value of the property does not exceed $1.5 million (pre-renovation).
Keeping in mind the value limits above, the grant could be used for house and land packages, builds on new vacant blocks, apartments including off-the-plan apartments, and renovations, as well as knock-down and rebuilds of existing homes.
Things you need to meet the eligibility criteria
To qualify for the grant, you need to be 18 years or older and an Australian citizen. Only ‘natural persons’ can apply, and the scheme cannot be accessed by companies or trusts.
There are two income caps that include $125,000 per annum for an individual and $200,000 per annum for a couple. The Government will use your 2018–19 taxable income or later to verify your income. You will need to supply the information contained on your notice of assessment from the ATO as proof of income. You can find out more about your taxable income here.
Construction of the new home or renovation needs to commence on or after 4 June 2020 and within three months of the contract date.
The grant is not available for investment properties or to owner-builders. It is also only available to Australian citizens, so if you apply as a couple, both people need to be Australian citizens to be eligible.
The application process if you are building a new home in NSW
If you meet the eligibility criteria for your application, you will be required to submit several items if you are building a new home in NSW including certificate of title, home building contract, contract for sale of land, birth certificate and evidence of Australian citizenship, income assessment, evidence showing foundations have been laid for construction commencement, and so on.
Most notably, if the contract for the sale of land is more than 12 months from the date of application you will be required to provide a valuation undertaken by a bank or licensed independent valuer.
The application process if you are renovating in NSW
If you are applying for the grant for renovation purposes and meet the criteria then you will need to supply a copy of the certificate of title for the property, the building contract for substantial renovations signed between 4 June 2020 and 31 December 2020, birth certificate and evidence of Australian citizenship, income assessment, and evidence the construction has commenced including the first invoice or receipt for work carried as evidence that $150,000 has been paid to the builder.
An independent valuation from a bank or licensed independent valuer must show the value of the house and land within the three months before commencement of renovation. To be eligible for this grant the value of your home needs to be under $1.5 million.
The grant applies to ‘substantial’ renovations over $150,000 and while renovations would involve significant building works to the home the funds can also be used to improve the accessibility or safety or liveability of the property.
The application process if you are buying off the plan in NSW
For people who wish to use the HomeBuilder grant for an off-the-plan purchase you will need to supply a copy of the certificate of title for the property, the sales contract signed between 4 June 2020 and 31 December 2020, birth certificate and evidence of Australian citizenship, as well as income assessment.
Getting an independent valuation prior to applying for the grant
If you are applying for the grant to build a new home or undertake a significant renovation you will require a valuation to submit with your application.
If you are building a new home on an existing block of land and your contract of sale of the land is more than 12 months from the date of your HomeBuilder application, you will require a valuation.
In determining the value of the land, our professional valuation experts take into consideration several issues including the zoning, location and views, size, shape, topography and land features.
If you are considering applying for the grant to conduct substantial renovations, you will also need an independent valuation to show the value of the house and land within a three- month period before the commencement of renovations. An important factor with this valuation is that the grant is limited to homes up to $1.5 million and homes valued at above this amount will be ineligible to apply.
McLennan Steege Smith Property Valuation can provide the most accurate valuation for your needs, taking into consideration factors including the land and building size, building details related to the type of materials (e.g. brick or fibro), the location, other sales in the area and the condition of the dwelling as well as additions like pools, garages and off-street parking.
Getting your application right
It is important to ensure that you have the right information prior to commencing your application. For new builds, payment of the grant monies will not occur until after the first progress payment has been made by you. For renovations you will be required to have made a minimum payment of $150,000 of the contract price and for off-the-plan/new home purchases the grant will be paid when your name is registered on the title.
Leave yourself enough time to get your application approved
Accessing the HomeBuilder grant will involve getting your ‘ducks in a row’ well before the 31 December 2020 deadline.
The contract for works undertaken needs to be signed between 4 June 2020 and 31 December 2020.
Other important considerations include: council approvals; whether you will require finance; the number of people who will be applying for the grant; and the ability of the NSW Government to facilitate approvals within the set timeframe (as they have indicated the people should expedite their applications so they don’t miss out).
Organise your independent valuation so you know where you stand
McLennan Steege Smith Property Valuation can provide you with an obligation-free quote for valuation services for your home build or renovation and our registered valuers can provide guaranteed turnaround times to ensure that you have your valuation in place to submit with your HomeBuilder grant application.
Our registered valuers with extensive experience and formal qualifications will ensure that you receive an accurate, independent valuation. You can contact us today to start your valuation process.
Start your HomeBuilder grant application or find out more
With applications to be received no later than December 2020 it is recommended that applications are submitted as soon as possible.
Get in touch with McLennan Steege Smith Property Valuation to organise your independent valuation to be included in your HomeBuilder grant application.