With COVID-19 taking over our lives since March 2020, its safe to say that you have probably put that renovation you wanted to do “on hold”. Let’s face it, these are uncertain and unprecedented times and we don’t blame you!
Recently the Prime Minister Scott Morrison announced a new grant scheme to support 140,000 direct construction jobs – along with a further 1 million workers in the residential building sector.
So, if you are eligible for the HomeBuilder grant scheme, is it worth renovating now?
What is HomeBuilder?
HomHomeBuilder is a time-limited, tax-free grant program to help the residential construction market to get through the Coronavirus pandemic.
HomeBuilder will provide eligible owner-occupiers (including first home buyers) with a grant of $25,000 to build a new home or substantially renovate an existing home where the contract is signed between 4 June 2020 and 31 December 2020. Construction must commence within three months of the contract date.
HomeBuilder will complement existing State and Territory First Home Owner Grant programs, stamp duty concessions and other grant schemes, as well as the Commonwealth’s First Home Loan Deposit Scheme and First Home Super Saver Scheme.
So are you eligible?
To access HomeBuilder, owner-occupiers must meet the following eligibility criteria:
- you are a natural person (not a company or trust);
- you are aged 18 years or older;
- you are an Australian citizen;
- you meet one of the following two income caps:
– $125,000 per annum for an individual applicant based on your 2018-19 tax return or later; or
– $200,000 per annum for a couple based on both 2018-19 tax returns or later;
- you enter into a building contract between 4 June 2020 and 31 December 2020 to either:
– build a new home as a principal place of residence, where the property value does not exceed $750,000; or
– substantially renovate your existing home as a principal place of residence, where the renovation contract is between $150,000 and $750,000, and where the value of your existing property does not exceed $1.5 million;
- construction must commence within three months of the contract date.
Not Eligible: Owner-builders and those seeking to build a new home which will be used as an investment property, or renovate an existing home which is an investment property, will not be eligible for HomeBuilder.
The registered or licensed builder (depending on the state or territory) must 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, if requested by the purchaser.
What renovations will be eligible?
To be eligible for HomeBuilder, the value of renovations must be within the price range of $150,000 and $750,000, the total value of your existing house and land must not exceed $1.5 million, and construction must commence within three months of the contract date.
Renovations must improve the accessibility, liveability and safety of the property. This excludes building a tennis court, pool or shed for the renovation contract for eligibility purposes.
Renovations must be completed by a licensed or registered builder (depending on the state or territory). In addition, any building or renovation contract entered into must be at arm’s length. This means the contract must be made by two parties freely and independently of each other. The terms of the contract should be commercially reasonable and the contract price should not be inflated compared to the fair market place.
“If you’ve been putting off that renovation or new build, the extra $25,000 we’re putting on the table, along with record-low interest rates, means now’s the time to get started,” said Prime Minister Scott Morrison.
“This is about targeted taxpayer support for a limited time using existing systems to ensure the money gets used how it should by families looking for that bit of extra help to make significant investments themselves.”
In some cases, this grant might be beneficial to your individual circumstances but your probably weighing up the merits of starting a $150,000 to $750,000 renovation on your home to obtain a $25,000 grant, is it worth it? Also, in the current climate, will banks process and approve your request with such wide-spread financial uncertainty?
We will leave this up to you…