Guide to Buying your First Home

19 CHAPTER TITLE First Home Buyer Stamp Duty Exemption In addition to the FHOG the Victorian State Government currently has a discount of the stamp duty for first-time homeowners. When you buy a property, you are required to pay a tax called stamp duty. For properties priced between $130,001 and $960,000 the price you pay for stamp duty is calculated as $2,870 for the first $130,000 and then 6% for any amount over $130,000. If you are to purchase a property for $400,000 the amount of stamp duty payable would usually be $19,070. However, the State Government is currently reducing this amount by 50% for first time home buyers. If you qualify for the FHOG then you will also receive this incentive. However, if you are a first home buyer and buy a block of land then purchase a new home from a builder to build for you there are huge savings on stamp duty, let’s assume you buy a block of land for $200,000 then purchase a home separately to be built on your land for $200,000. In this instance you only pay stamp duty on the land price. The total stamp duty payable by you in this instance is $7,069.94. This is just another reason why now is the right time to get started on home ownership. When it comes to stamp duty, your best option is to buy land and build a new home. Assistance from Parents The bank of mum and dad can be a great source for getting started. Many parents or grandparents assist their children in buying their first home; however, you need to be careful how this is done and make sure you don’t make yourself ineligible for the first homeowners grant. If your relatives who have previously purchased wish to have their name on the contract and on title, then you will not be eligible for the First Homeowners Grant, nor the First Home Loan Deposit Scheme. So, this really defeats the purpose of them assisting you. The better way to approach this is to have them lend you an amount of money and have them pay it into your bank account then the bank will see it in your account when calculating the amount you can borrow. I suggest, to give your parents or grandparents some level of comfort, volunteer to enter into a loan agreement with them, this should avoid the need for them to be listed on title.