First Home Owners Grant in QLD is Great— But What Else Do You Need to Consider | M&D Realty

The First Home Owner Grant (FHOG) is a government initiative aimed at helping first-time buyers get a foothold in the property market. In Queensland, this grant provides eligible buyers with a one-off payment of up to $15,000 when purchasing or building a new home valued under a certain threshold. This assistance is especially valuable in cities like Brisbane, where property prices are steadily rising. But how does the FHOG impact property taxes in Brisbane, and what should first-time buyers keep in mind regarding ongoing tax obligations??

Here’s a breakdown of the key points to understand about the FHOG and its tax implications.?

1. The Basics of the First Home Owner Grant in Queensland?

• Eligibility: To qualify for the FHOG in Queensland, applicants must be at least 18 years old, Australian citizens or permanent residents, and purchasing a new home (or substantially renovated home) valued at under $750,000. The applicant must also intend to occupy the property as their principal place of residence within a year of completion.?

• Grant Amount: As of 2023, eligible buyers receive a grant of $15,000, which can be used towards a deposit, reducing mortgage costs, or home improvements.?

• Purpose: The grant is designed to make it easier for first-time buyers to enter the property market, offsetting some upfront costs.?

2. Immediate Financial Relief, But No Direct Effect on Property Taxes?

The FHOG itself is a grant and does not directly affect property taxes. It’s a one-off payment that assists with purchasing costs but has no direct impact on taxes like council rates, land tax, or ongoing property-related charges. While it provides significant upfront financial relief, buyers should remember that property taxes will still apply as usual.?

3. Impact on Stamp Duty and Potential Concessions?

In Queensland, first-time buyers can benefit from stamp duty concessions when purchasing a home. While stamp duty and the FHOG are separate programs, both are aimed at making property ownership more accessible:?

• Stamp Duty Concessions: First-time buyers of properties under $500,000 may qualify for full exemptions or discounts on stamp duty, depending on the property’s value and the buyer’s eligibility.?

• Combined Savings: When combined with the FHOG, these concessions can significantly reduce the upfront cost of buying a home in Brisbane. However, keep in mind that stamp duty is a one-time cost, not an ongoing tax.?

4. Council Rates and Ongoing Property Taxes?

Even with the FHOG, first-time homeowners will be responsible for annual council rates and other property-related taxes. Council rates in Brisbane are calculated based on the property’s value, location, and other factors. While the grant can help alleviate initial financial burdens, homeowners should budget for these recurring expenses to avoid any surprises down the road.?

5. Potential Implications for Land Tax?

For most Brisbane first-time buyers, land tax won’t be an immediate concern, as it primarily applies to properties exceeding a certain land value threshold. As of 2023, the land tax threshold in Queensland is $600,000 for individuals. Since most first-time buyers are purchasing a single residence, they likely won’t be affected by land tax unless they acquire additional property or the land value of their residence exceeds this threshold in the future.?

6. Increased Property Value and Long-Term Tax Considerations?

The FHOG’s role in boosting first-time buyers' purchasing power can indirectly affect property values. By enabling more people to buy homes, the demand in areas like Brisbane could potentially drive up property values over time. Higher property values mean that future buyers could face increased council rates and possibly land tax if thresholds are surpassed. First-time buyers should be aware that while their immediate tax obligations remain unaffected, they may face higher taxes if property values continue to rise.?

7. Capital Gains Tax (CGT) Exemption on Principal Residence?

One of the biggest tax advantages for first-time buyers is the Capital Gains Tax exemption on their primary residence. If buyers live in their Brisbane property and eventually decide to sell it, they’re exempt from CGT, making this an appealing long-term investment. The FHOG thus not only helps buyers enter the market but also positions them for potential tax-free capital appreciation if they choose to sell in the future.?

8. Preparing for Long-Term Costs?

While the FHOG helps with upfront expenses, it’s essential for buyers to consider the ongoing costs associated with property ownership:?

• Maintenance and Repairs: Regular maintenance is essential to maintain the property’s value and avoid depreciation.?

• Insurance: Home and contents insurance are critical to protect against unforeseen events.?

• Utility Bills and Fees: Monthly expenses for utilities and service fees should also be factored in.?

Conclusion?

The First Home Owner Grant in Queensland is a valuable tool for first-time buyers in Brisbane, helping to offset the initial costs of property ownership. However, while it eases entry into the market, it does not directly affect ongoing property taxes like council rates or land tax. Buyers should plan for these recurring expenses to ensure they can comfortably maintain their new home.?

By understanding both the benefits and limitations of the FHOG, Brisbane’s first-time homeowners can make informed decisions and better navigate the financial responsibilities of property ownership. With the additional incentives from the FHOG and potential stamp duty concessions, Brisbane’s property market offers a promising landscape for those looking to start their homeownership journey.? ?

If you are a First Home Owner Grant recipient in Queensland and have questions about how the grant impacts your property taxes or ongoing financial responsibilities, please feel free to reach out to Nitha Coetzer at [email protected] for personalised guidance and support.?