As part of the Federal Government’s economic response to the COVID-19 pandemic, it has recently announced the introduction of the new HomeBuilder initiative.
Since that announcement, we have received a number of enquiries concerning the initiative, including the benefits of such initiative and eligibility.
As a result, we provide below a brief summary below outlining the announcements made by the Federal Government.
Please note, the initiative has only been announced at this stage, and is yet to be formally implemented (by State and Territory Governments). However, once the relevant State and Territory Governments have established its applicable Homebuilder requirements and application process, then it is intended that all applications under the initiative will be able to be backdated to 4 June 2020.
The HomeBuilder initiative provides for payment of a tax-free grant of $25,000 for eligible owner-occupiers, including first home buyers.
The purpose of the grant is to assist those eligible to build a new home or substantially renovate an existing home, thereby providing a stimulus for the building and construction industry following its downturn as a result of the COVID-19 pandemic, as well as encouraging those eligible to commence or continue with their home builds and renovations.
To be eligible for the grant, you must meet the following criteria:
- You must be an owner-occupier that is building or renovating a home.
- You must be a natural person (an applicant cannot be a company or trust).
- You must be over the age of 18.
- You must be an Australian citizen.
- You must meet one of the following income caps:
- As an individual applicant, you must have a taxable income under $125,000 per annum based on your 2018-19 tax return (or later); or
- As a couple applicant, you together must have a taxable income under $200,000 per annum based on both 2018-19 tax return (or later).
- You are required to enter into a building contract between 4 June 2020 and 31 December 2020 to either:
- Build a new home as a principal place of residence, where the property value does not exceed $750,000; or
- Substantially renovate your existing home as a principal place of residence, where the renovation contract value is between $150,000 and $750,000, and where the value of the existing property does not exceed $1.5 million.
- You are required to commence construction, pursuant to the above contract, within three months of the contract date.
There are various requirements, in addition to the above criteria, that may affect your eligibility for the grant, such as:
- Owner-builders and those seeking to build a new home or renovate an existing home as an investment property are ineligible.
- When negotiating and entering into the building contract, the parties to those contracts must be at arm’s length (contract made by two parties freely and independently of each other, and without some special relationship, such as being a relative).
- Renovations or building work must be undertaken by a registered or licensed building service ‘contractor’ and named as the builder on the building licence or permit.
- Renovation works must be to improve the accessibility, safety and liveability of the property. It follows that grants will not be given for property additions that are not connected to the main residence, such as swimming pools, tennis courts, outdoor spas and saunas, sheds or garages (unconnected to the property).
When applying for the grant pursuant to the relevant State or Territory application process, you will likely be required to provide at least the following information and documentation:
- Proof of identity;
- A copy of the building contract dated and signed by you and the nominated registered or licensed builder;
- A copy of your builder’s registration or licenses;
- A copy of your 2018-2019 tax return (or later) to illustrate your eligibility concerning the income threshold (see above); and
- Any other relevant documents such as council development approvals, building contracts, occupation certificates and evidence of land values.
We will continue to follow the implementation of the HomeBuilder initiative as it gets approved and passed into law. However, in the meantime, if you are considering an application then please review the above and don’t hesitate to get in touch with our property team should you have any questions.