The first time home buyers concession requires that the property is your principal place of residence. You need to move in within 12 months of settlement. Does anyone know if I can rent out the place for say 11 months and move it after that?
I am in Victoria.
I dont think that is quite true - https://www.homeloanexperts.com.au/home-loan-articles/dont-l…
Either way, I just want to know whether it is allowed or not. Dont want to do anything illegal.
What you said in the OP is fine. It's black and white, you must move in within 12 months.
Doesn't matter if you spend 11 months renovating or renting it out.
What state are you?
If vic, yes it is as you described. As long as you move in by day 365, you’re fine. And you have to stay there for 12 continuous months.
The reason for the 12 month leniency is in the event you’ve purchased a property with an existing rental agreement.
Actually this is wrong for vic.
If the state revenue office finds out you rented the property at all in the first 12 months this changes the classification from a PPR to an investment and the FHOG is no longer applicable. They will claw back the grant and will also fine you.
Your bank will also probably change your interest rate as your loan status goes from owner occupier to investor. (If you initiate the tenancy)
Same applies if you got a stamp duty concession etc.
Have seen the very strong hands of the SRO come down on a friend. He ended up having to sell the home to cover the fines and expenses around his “mistake”
Exception only applies if you buy a house with a tenant but you must evict tenant within the 12 months and the bank and SRO must be advised the tenant is present and their details provided.
Thanks. This is good to know. Do you have any reference for this?
What was the situation with your friend? Did he let it out for over 12 months or was it just the same as my scenario?
Think there must be more to your friend's story than you know, or he definitely should have fought back. Are you sure it wasn't land tax plus penalties and interest that he had to pay for when the property was rented out (and which is likely something the OP should be taking into consideration)?
Direct quote from the SRO website:
You (or at least one applicant) must occupy the home as your PPR for at least 12 months, commencing within 12 months of settlement or completion of construction.
You make a declaration to that effect when applying for the FHOG or concession. There is nothing in the form you submit that deals with renting in that first 12 months, and nothing on the SRO website that I can see. I don't have any Vic experience, but in other states that have it worded exactly the same there is no issue with renting in that first 11.9 months.
Just asked him for clarification.
he purchased a new home (new Build)
got both the Grant and the stamp duty concession.
it was vacant at time of purchase
he listed it for lease on a 6m rental through an agent.
SRO found out
Had to pay the stamp duty
the FHOG was reversed and he had to renegotiate with his bank re his loan
The bank changed his loan from Owner to Investor as the SRO clawed back the grant.
He fought back and they said as the property was vacant at time of settlement he was not allowed to rent it out, he could leave it empty for 12 months if he wanted but the minute he rented it out it disqualified him from the first home owners offers.
he went through a process including taking the SRO to court.
Was found against him and he had to pay costs and fines
I am not speaking first hand, hence why after your comment i followed it up
his words not mine.
Nothing more to it, simply he said.. if its vacant u can not rent it out and u must move in within 12 months
@jimbobaus: Did he get told what the SRO is relying on to claim this is a rule or requirement? Because it is not in the application or the associated information when you apply for the Vic FHOG or duty concession, so they can't just make up their own separate rule/requirement.
Also if he had only listed it for lease, he hadn't actually rented it out to anyone and presumably could still comply with the (listed) requirements.
To the OP, I would just be emailing the SRO and seeing what they say (in writing) in response.
@djkelly69: He leased it out.
A bond was paid.
The SRO did a rental authority check which they do randomly. His game up.
Court found in SRO favour so I guess the rules are clear.
Court found in SRO favour so I guess the rules are clear.
It is really not that simple. The SRO can't just make up the rules as they see fit. If you meet the written requirements of the grant or concession, you are entitled to it.
I still believe there is more to this somewhere, possibly to do with the new home/build part and maybe some specific requirements with whatever scheme it was under.
@notfrodo: Thanks mate. Such is life on an internet forum.
As I noted above, I think there is probably a bit more to the situation above which differentiates it from your situation/proposal. Seems pretty clear in your case that you are complying with the requirements and rules, so shouldn't be an issue.
Would definitely push for an actual, useful response from the SRO however.
Vic. Updated the post.
Been there. Dont take them for fools.
When we bought our first home we didn't stay the required period and were 1 month short.
Got audited and were asked to repay the fhog and stamp duty!!
They did check in our case. They check with the rental bonds authority in your state and postal and utility services. I know a few people in our investors group who've been investigated.
Cheers!
I think that bit is clear from their website. You have to live there for 12 months. It is also clear the you dont have to move in for 12 months. The site doesnt mention whether the property can be let out during that period.
Requirements for living in the property - You or one of the other first home buyers must:
* move into the new home within 12 months after buying the property and
* live there for at least six continuous months.
source: https://www.revenue.nsw.gov.au/grants-schemes/first-home-buy…
That's NSW though; different rules for different states
They will ask for utility bills from first and 12th month.
I got the FHOG and stamp duty exemption in NSW. Everything was above board, I moved in straight after construction was finished and lived there for well past 6 months. My change of address details were put through several government agencies at the time. I never got audited but it can and does happen. I daresay they use data matching in the background to flag who they want to audit. Other states may be more aggressive in their auditing.
Yes, but will forever have a cgt applied on that period.
🤣
I just got off the phone with a conveyancer and they told me that it is indeed ok to let out the property during the initial 12 months. I have also sent the query to SRO. Will update here once I hear back from them.
Looking to get this information too. Pls post the update once you hear back from SRO.
The SRO's response was unhelpful as anticipated - they just rehashed what was on the website. Didn't directly answer my question at all. I am following up.
Here is an interesting excerpt from the SRO website - https://www.sro.vic.gov.au/buyer-grants-concessions
What if I rent out my property?
You still get the concession if you use the property as your principal place of residence within 12 months of settlement, for at least 12 continuous months.
This makes it seem that you can actually rent out the property.
From the SRO's email:
To be eligible to receive the First Home Owner Grant you must meet the residency requirement as outlined in Section 12 of the First Home Owner Grant Act 2000.
You (or at least one applicant) must occupy the home as your/their principal place of residence for a continuous period of at least 12 months, commencing within 12 months of either settlement or completion of construction.
In reality, no one checks after you get the grant.