All Topics / Finance / FHOG Can it be used buying an investment property

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  • Profile photo of ClintoneClintone
    Participant
    @clintone
    Join Date: 2009
    Post Count: 5

    Hi GUys

    This might be a silly question and im sure its been answered before. Any answers would be appreciated.

    CE

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,190

    Yes, as long you you live in it for 6 months during the first 12.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of madelizabethanmadelizabethan
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    @madelizabethan
    Join Date: 2005
    Post Count: 28

    Hi Clintone,

    Terry is right.

    To be a bit more specific, you must live in the property yourself for the six consecutive months out of the first 12 months that you own the property.

    Also, you (and anyone buying the property with you) must never have owned a property as a PPOR before (that is, you cannot have lived in a property that you owned AT ALL, even for a short time).

    This does mean that you are allowed to own property solely for investment purposes (ie you don't live in it) before you apply for the FHOG, but only if you bought those investment properties after the 1st July 2001.

    So, if you're prepared to live in – and pay the mortgage on – an investment property for six months before you rent it out, this is a great way to get money to start investing!

    Taking an even longer-term view of it, you can also apply this to the First Home Savers Account, as long as you're happy to wait for four years and save steadily until you can access it. Right now, it may be more practical and lucrative (in terms of capital gains and increases in rental returns as well) to take the boost in the FHOG while you can though!

    Profile photo of ClintoneClintone
    Participant
    @clintone
    Join Date: 2009
    Post Count: 5
    madelizabethan wrote:
    Hi Clintone,

    Terry is right.

    To be a bit more specific, you must live in the property yourself for the six consecutive months out of the first 12 months that you own the property.

    Also, you (and anyone buying the property with you) must never have owned a property as a PPOR before (that is, you cannot have lived in a property that you owned AT ALL, even for a short time).

    This does mean that you are allowed to own property solely for investment purposes (ie you don't live in it) before you apply for the FHOG, but only if you bought those investment properties after the 1st July 2001.

    So, if you're prepared to live in – and pay the mortgage on – an investment property for six months before you rent it out, this is a great way to get money to start investing!

    Taking an even longer-term view of it, you can also apply this to the First Home Savers Account, as long as you're happy to wait for four years and save steadily until you can access it. Right now, it may be more practical and lucrative (in terms of capital gains and increases in rental returns as well) to take the boost in the FHOG while you can though!

    Thanks alot that great info.

    Another question though, If I and another party purchase a home together and it is the first for both of us, Are we able to use each individuals FOHG? Essentially doubling the grant for the one property…

    Thanks

    CE

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Hi CE

    If I and another party purchase a home together and it is the first for both of us. Regretfully not you will only receive it once.

    Obviously if you intend to rent the property long term make sure you structure the loan correctly from day 1 to avoid any issues down the track. Ideally I would be taking out a 95% interest only loan linked to a 100% offset savings account and deposit all of your income into the offset account whilst you are living in the property as your main residence.

    If down the track you decide to purchase another property and rent the original residence out then I would switch the offset account to the new loan.

    This will maximise your interest savings and preserve the tax deductability of the original loan.

    Too many clients get this wrong so make sure your Mortgage Broker is investment orientated.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Duplicated Post

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of Investment-MortgagesInvestment-Mortgages
    Member
    @investment-mortgages
    Join Date: 2009
    Post Count: 32

    Yes very good posts above!

    Another thing to be aware of is the factor of stamp duty.
    I rung the stamps office for clarification however im not 100% certain, you need to move in in the first 12 months(not 100%) sure, and unfortunately live in the property for the full 12 months to receive the full stamp duty concession.

    Its hard to clarify however needs to be looked into if you plan to move in to get FOHG then rent it out asap….

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    Matt this is correct but varies from State to State.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of chrisb123chrisb123
    Participant
    @chrisb123
    Join Date: 2009
    Post Count: 9

    DOES THIS APPLY IN VICTORIA? I have purchased a property (bought land and build house) in Vic using FHOG. Lived in in for 6 months and now about to rent out as an investment property. I have obviously paid stamp duty on the land. What are my stamp duty implications now as i have only lived in it for 6 months???

    Please help…

    Profile photo of ediot123ediot123
    Participant
    @ediot123
    Join Date: 2007
    Post Count: 54

    Hi Guys,

    Sorry to go slightly off topic here, I posted something similar yesterday but haven't got the answer to yet.

    Which would be the better option though. If you are using the property for investing purposes but had to live in it for 12 months, you are losing out on 12 months rental income plus all your tax deductions.

    Would it be worth it going through all of this just to receive the FHOG, Stamp duty concession and if still eligible the FHOB??

    Or would you rather not live in it at all and use the property as IP from day 1, start receiving rental income and all your tax benefits??

    Cheers.

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