First Home Buyers ~ $500k, Tips and Tricks (Tax)

knobbs on 14/11/2016 - 20:16
Last edited 14/11/2016 - 20:27

Hi Ladies and Gents,

My partner and I are looking at purchasing our first home. As she is a doctor we are looking for loans at 90% LVR and no LMI, we have found one at 3.85% fixed for 5 years. We were hoping to keep it under 500k and new to get the first home owners grant and not pay stamp duty. So my question is what should we know/lookout for tax wise (or anything in general) and when selecting a home? Currently we are looking at probably a townhouse as to get under $500k and within a reasonable distance from the city (Brisbane, QLD). Of Course I would love a house more but we would probably have to look at buying a house in a development?

Financial

Comments

BensonP on 14/11/2016 - 20:24

Congratulations on being in a position to buy!:)

In my experience you need 20% deposit to not pay LMI.
You still pay Stamp Duty for first home buyer. Just 50% off.

And you can't double dip on first home buyer grant and tax breaks straight away.

If you get first home buyer grant, it has to be your primary place of residence.

To get tax breaks it has to be an investment.

As for a fixed loan, you won't be able to pay more than $10,000 extra off your loan per year. As a doctor gets paid well (generally) this could become a problem. If you go variable, you can put ANY extra money you have straight into the homeloan. Whether it be 10k or 50k.

Hope this helps!
- knobbs on 14/11/2016 - 20:37
  
  Yeah I believe stamp duty for first home buyers under $500k is free and a 'reduced' amount between 500-550 after 550 full stamp duty.
  
  What tax breaks can you get with first home buyers?
  
  Yeah we are going to be living in the home, should've specified that sorry.
  
  Yeah we were a little concerned with the max extra payments part. Although to be honest I have not seen the full details of the 3.85% offer, it was a friend of the family kind of thing. As she is only relatively new to being out of uni she will be moving from around ~70 to ~100 next year. Although an increase most will be to tax :S
  - BensonP on 14/11/2016 - 21:04
    
    +2
    
    You won't get any tax incentive as it is your primary home.
    
    You will be surprised how much extra you can pay off once you tighten your proverbial belt. There are some very good interest rates for Standars Variable now. I am on 4.07 and I could do better.
    
    At the end of the day, only you know what you can afford.
    
    All the best :)
- frinik on 14/11/2016 - 21:44
  
  +4
  
  Doctors have access to special rates with regards to 90% LVR and no LMI as they're seen as low risk by the banks.
betsy86 on 14/11/2016 - 21:35

+4

As a doctor, I can tell you from personal experience that you can do better than 3.85% on a fixed loan and you can get a 90% loan without LMI. When I was an intern, CBA were willing to lend me 500k with a 10% deposit. That was without a partner/second income.

I would suggest looking into getting an interest only loan that you can convert to an investment loan down the track, as you probably won't be living in the townhouse forever. Have a 100% offset account and you can put as much money as you can into it while you have it as a PPOR and can't claim the interest through tax.

*Suggestions only, see a broker or financial adviser as it relates to your individual situation
- Euphemistic on 15/11/2016 - 07:17
  
  Not sure suggesting an interest only loan is the best option for a home loan. You won't be paying anything off it. If it doesn't turn into an investment property you will be burning money for no reason and might as well be paying rent.
  - Shadowsfury on 15/11/2016 - 07:20
    
    +1
    
    Hence why they additionally suggested an offset account.
    - Euphemistic on 15/11/2016 - 07:36
      
      Which only means you pay less interest, you aren't paying off the amount owing.
    - Shadowsfury on 15/11/2016 - 09:16
      
      +2
      
      @Euphemistic:
      You're paying less interest because the net amount you owe is decreasing. Yes your principal doesn't change but that is exactly why offset accounts are recommended - the amount of interest you pay would be no different between an offset account and paying extra off a P&I mortgage, but you have the option to reverse all that out and use the money elsewhere.
    - lehatu on 15/11/2016 - 10:48
      
      @Shadowsfury: Exactly, like buying a new car? If you're paying P&I, the P just gone. Now you get to keep the P to buy stuffs
lehatu on 14/11/2016 - 21:47

Betsy right, get a interest only loan and open a 100% offset account connect to the loan. The point is not just to convert into investment down the track, but to also keep the money that you would have pay into principal and use it for another deposit or just to buy something that you want (like a car?)

Are you living in Brisbane? QLD First Home Owner Grant give you 20k for total house value up to 750k and Stamp Duty free (there's a transfer stamp duty or something like that, which is around 1k)

For tax break, no, you won't get any tax break from your home, only through investment. So if you really want to, you can buy the house that's good for invest, and just rent where you live? But in that's way you have to pay stamp duty lol, or you can move in the investment property for 6 months to claim the Grant, then move out?
- altomic on 14/11/2016 - 21:50
  
  offset account for sure.
- knobbs on 14/11/2016 - 22:02
  
  So you guys are saying this calculator is outdated?
  
  It is saying for new buyers, under 500k no stamp duty, 500-550 reduced and over 550 full amount
  
  http://www.realestate.com.au/calculators/stamp-duty-calculat…
  - lehatu on 14/11/2016 - 23:10
    
    Oh geez you remind me how messy the concession is in QLD. I am messing myself up with First Home Owner Grant and Stamp Duty Concession.
    Here some useful information i got:
    There are three major exemptions and concession from duty available in QLD - first home concession, first home vacant land and home concession.
    
    First Home Concession
    Currently, a concession is available for the transfer, or agreement for the transfer, of a person’s first home (first home concession). A $8,750 stamp duty concession applies for homes up to $505,000, and a phasing-out rebate applies for values up to $550,000. To qualify, the person must never have previously held an interest in another residence and must satisfy occupancy requirements:
    
    -you have never owned property anywhere in the world before; and
    you intend to move into the property within 12 months of settlement; and
    -the property will be your principal place of residence for a minimum of 12 consecutive months after you move in; and
    you will not enter into a new lease of the property prior to moving into it.
    
    First Home Owner Grant:
    The $20,000 first home owner grant was created to help first home buyer. The $750,000 cap applies to all transactions where the commencement date is on or after 1 July 2016.
    
    In 2012, the Queensland Government increased its grant for first home owners who are buying or building a new home. Those eligible for Great Start Grant will receive a one-off payment of $15,000, but only if the value of the home is under $750,000. It is available for eligible transactions dated on or after 12 September 2012.
    
    Building Boost Grant: A new $10,000 Queensland Building Boost Grant was introduced for a person or corporation buying or building a new home in Queensland for a value less than $600,000 and was available from 1 August 2011 to 30 April 2012. This grant is no longer available after 30 April 2012.
    
    First Home Vacant Land Concession
    In regards to vacant land a full exemption from stamp duty is available to first home buyers purchasing vacant land for up to $250,000. A concession will continue to apply on a sliding scale for land over $250,000 (but not more than $400,000). Once again you must meet the requirements:
    
    you have not previously held an interest in residential land (whether in Queensland or elsewhere); and
    you have not previously claimed this concession for other vacant land; and
    you will build and occupy the home constructed on the land as your first principal place of residence within 2 years after the land is transferred to you; and
    you will not dispose of the land before, or within 1 year after you start to occupy the residence constructed on the land as your home.
    Home Concession
    New Queensland Government approved the reinstatement of the home concession from July 1, 2012. Contracts entered into on or after 1 July 2012 by home buyers will be eligible for the transfer duty home concession when purchasing a home if they meet the concession conditions:
    
    you have owned property before; and
    you intend to move into the property within 12 months of settlement; and
    the property will be your principal place of residence for a minimum of 12 consecutive months after you move in; and
    you will not enter into a new lease of the property prior to moving into it.
    
    They are boosting population in QLD so hard. Since there are concessions/exemptions everywhere and it is so messy. Unlike NSW, 10k for First Home Owner Grant, 5k for New Home Grant. DONE!
JetLi on 15/11/2016 - 17:24

If your partner is a doctor working at a hospital, she may have access to FBT concessions (even more so if she works for numerous hospitals within the tax year), get her to speak to a proper qualified accountant.

First Home Buyers ~ $500k, Tips and Tricks (Tax)

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