Federal Government HomeBuilder stimulus package
July 15, 2020
This information sheet provides details based on the current publicly available information regarding key aspects of the package.
Q. What is the HomeBuilder stimulus package?
HomeBuilder is a time limited, tax-free $25,000 grant for owner occupiers who build new homes or carry out substantial renovations projects.
HomeBuilder is available for building contracts signed between 4 June 2020 and 31 December 2020, this includes sales contracts for new builds where building commences after 4 June 2020 (Contract).
An existing home that has already been completed, or started construction before 4 June will not qualify for HomeBuilder.
Eligible Home Owners
Q. Who is eligible for HomeBuilder?
To be eligible for HomeBuilder, your client must:
- Be a natural person (not a company or trust);
- Be over 18;
- Be an Australian citizen; and
- Meet one of the following two income caps:
o $125,000 per annum for an individual;
o $200,000 per annum for a couple.
Q. Are owner builders eligible for the grant?
Q. My client is an investor, are they eligible?
No, 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, are not eligible for HomeBuilder.
Eligible Building Work
Q. What type of building work is eligible for HomeBuilder?
To be eligible for HomeBuilder, you must enter into a Contract between 4 June 2020 and 31 December 2020 to either:
- Build a new home as a principal place of residence on new land, where the property value (house and land) does not exceed $750,000;
- Build a new home as a knock down rebuild renovation project, where the value of the existing property (house and land) does not exceed $1.5 million pre-renovation;
- Purchase a yet to be commenced new home ‘off the plan’ that does not exceed $750,000. or
- Substantially renovate an existing home as a principal place of residence, where the Contract is between $150,000 and $750,000, and where the value of the existing property (house and land) does not exceed $1.5 million pre-renovation.
(together called the ‘contract price caps’)
Q. What is considered an eligible ‘new home’?
Your client will be building a new home if:
- They already owned vacant land before 4 June and they want to build a new home on it and the total value of the land and new build does not exceed $750,000.
- They bought land after 4 June and want to build a new home on it and the total value of the land and new build does not exceed $750,000.
- They bought a house and land package where the home is yet to be constructed and the total value of the house and land package does not exceed $750,000.
Q. What is considered an eligible renovation?
An eligible renovation includes building work that involves a substantial renovation of an existing home as a principal place of residence, where the Contract is between $150,000 and $750,000, and where the value of the existing property (house and land) does not exceed $1.5 million pre-renovation.
To be substantial, the renovation does not need to involve removal or replacement of foundations, external walls, interior support walls, floors, roofs or staircases. However the renovation must improve the accessibility, liveability and safety of the property.
HIA understands that standalone granny flats, tennis courts, swimming pools and structures that are not connected to the property (i.e. outdoor spas and saunas, sheds or standalone garages) will not be eligible.
An eligible renovation project also includes a ‘knock down rebuild’ home where your client owns the property (house and land). The value of the work must be between $150,000 and $750,000, and the value of the existing property (house and land) does not exceed $1.5 million pre-renovation.
Each State and Territory will determine the evidence required to demonstrate the pre-renovation property value.
It is expected that your client will continue to live at the property (as their principal place of residence) for at least 6 months. However this will be confirmed by the relevant State or Territory authority.
Q. I carry out speculative work, are my clients eligible?
Speculative home building work may be eligible for HomeBuilder if:
- Construction work commences on or after 4 June; and
- the Contract is signed between 4 June 2020 and 31 December 2020
If a Contract is signed with a client prior to the commencement of construction on a speculative home then construction work must commence no later than three months after the Contract is signed.
An existing home that has already been completed, or started construction before 4 June, is not eligible for HomeBuilder.
Q. I build granny flats, are my clients eligible?
The Government has indicated that standalone granny flats are not eligible renovations for HomeBuilder.
Q. I build pre-fabricated homes, are my clients eligible?
Yes, provided that the construction is undertaken by a registered or licensed building services ‘contractor’ who is named as the builder on the building license or permit and all other eligibility criteria are met.
Q. I build off the plan apartments and townhouses, are my clients eligible?
Yes, provided that:
- your client signs a Contract to buy an off the plan dwelling between 4 June 2020 and 31 December 2020; and
- construction commences on or after 4 June 2020 and no later than three months after the contract is signed.
However, if your client signed the Contract to buy the dwelling after 4 June 2020, and construction commenced before 4 June 2020 your client is ineligible.
Q. Who can carry out the building work?
The new home or renovation work must be completed by a licensed or registered builder (depending on the State or Territory). The client may be asked to provide a copy of your license or registration details on the application for the grant.
The builder must comply with all laws that apply to the proposed residential/domestic building work.
Q. Are there any limits on who I can carry out the work for?
Yes, you must make sure that your client does not have a close relationship with you, meaning your dealing are at arm’s length.
- This means the contract must be made by two parties freely and independently of each other, and without offering favour for some special relationship, such as being a relative or contracting as an individual with your own building company.
- The terms of the contract should be commercially reasonable and the contract price should not be inflated compared to the fair market price.
Further details will be provided by States and Territories.
HIA recommends using the HIA new homes or renovation contracts appropriate to your State or Territory.
Q. Can I split up my contracts, or exclude certain works to meet the contract price caps?
HIA does not recommend that you split up the building work, or exclude works that would normally form a part of the project, in order to meet the contract price caps.
Q. Can I use a cost plus contracts?
Other than existing State or Territory requirements regarding cost plus contracts, as long as there is a building contract in place (and all the other criteria are satisfied) cost plus arrangements for the carrying out of residential/domestic building work are permitted.
However, it is foreseeable that any intention to manipulate the contract price, through a cost plus contract, to satisfy the contract price caps will not be looked on favorably.
Q. When does construction have to commence?
To be eligible, construction must commence within 3 months of the date of the Contract.
Q. What if I cannot commence work within 3 months of signing the Contract?
States and Territories may exercise discretion where commencement is delayed beyond three months from the contract date due to unforeseen factors outside the control of the parties to the contract (e.g. delays in building approvals or finance approvals).
However, if you know that you will be unable to commence construction within three months of the date of the Contract HIA suggests discussing the matter with your client and:
- In those States where it is permitted, consider entering into a preliminary agreement with your client to provide sufficient time to complete the necessary steps required before signing a building contract.
A preliminary agreement or preparatory work agreements address preliminary or pre-construction works, for example obtaining a soil report and foundation data, or to develop design, plans and specifications for the construction or renovation of a home. Some may also ask for an initial fee. Please speak to your local Workplace Adviser for more information.
- Ask the client to wait to sign (and date) the building contract until all necessary steps are taken to allow the contract to be confirmed and ensure work can then commence within 3 months of the contract being signed.
Q. What if the Contract is dated before 4 June 2020?
Your client will not be eligible for HomeBuilder.
Q. What should I do if my client wants to terminate and re-enter into a Contract after 4 June?
You should warn your client that doing so may make them ineligible for the grant.
HIA understands that a homeowner who attempts to terminate a contract entered into before 4 June and re-enter a contract for the same home or renovation after 4 June will be ineligible for HomeBuilder.
Payment of HomeBuilder
Q. Who will make the payment?
The grant will be administered by each State and Territory office of revenue.
Q. When will the payment of the grant be made?
The grant will be paid directly to the owner occupier by the office of revenue.
- For new builds, grants will be paid after construction has commenced and the first progress payment has been made.
- For substantial renovations, grants will be paid after construction has commenced and at least $150,000 of the contract price has been paid in relation to the renovation.
- For off the plan/new home purchases, grants will be paid after the applicant (s) name is registered on title.
There may be some state differences so check with your local revenue office.
Access to other Government measures
Q. Can I access other pre-existing State and Territory programs?
Yes, HomeBuilder is designed to complement existing 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.
Are there any penalties associated with HomeBuilder?
HIA expects that the State and Territory offices of revenue responsible for implementing the scheme will use existing mechanism to mitigate the chances of fraud occurring.
At this time, HIA is unaware of any specific penalty or anti-avoidance measures associated with HomeBuilder.
The Government has released the following information that may also be of assistance:
If you have any further questions or concerns contact a HIA Workplace Adviser on 1300 650 620 or email email@example.com