The HomeBuilder scheme targets the residential construction market by providing tax-free grants of $25,000 to eligible owner-occupiers, including first home buyers, to build a new home or substantially renovate their existing home.
There are a few complexities to this grant that both home builders/renovators and the building industry need to be across before jumping in and signing a new contract on the expectation that the grant will automatically apply
Eligibility for Owner Occupiers
The HomeBuilder scheme is available to owner occupiers. It is not accessible to owner builders, developers or investors.
You need to be:
An individual (not a company or trust); and
18 years of age or older; and
An Australian citizen.
And, you need to meet the income test. To be eligible, you cannot earn more than:
Individuals – $125,000 based on your 2018-19 or later tax returns
Couples – $200,000 based on both of your 2018-19 or later tax returns
The building project eligibility
The building contract must be signed between 4 June 2020 and 31 December 2020. Construction or renovation must commence within three months of the contract date.
The grants are available if you build a new home or renovate a home to live in (your principal place of residence) where:
New Home the value of the house and land do not exceed $750,000
Substantial Renovations between $150,000 and $750,000 (the value of your existing home and land cannot exceed $1,500,000). There are limitation as to the renovations – for example, no swimming pools, tennis courts or outdoor garages, to name some.
Integrity measures and pricing
Building contracts must be at arms-length, that is, the parties cannot be related or connected.
Renovations or building work must be undertaken by a registered or licenced building service ‘contractor’ (depending on the state or territory you live in) and named as a builder on the building licence or permit.
When it comes to price, the terms should be commercially reasonable, and the contract price should not be inflated compared to the fair market price. The rules enable the purchaser to request that the builder demonstrate that the contract price for the new build or substantial renovation is no more than a comparable product (measured by quality, location and size) as at 1 July 2019.
Interaction with first home owner grant schemes
The HomeBuilder grant does not exclude first home buyers from accessing other grants and concessions such as the First Home Owner Grant, stamp duty concessions, the First Home Loan Deposit Scheme, and First Home Super Saver Scheme.