First Home Buyer: Investor’s Perspective

Posted by Luke Graham

Today, particularly when considering Blue Wealth’s ‘Buying versus Renting’ findings, more and more people are opting to purchase investment properties before buying their own home. For those in capital cities (particularly Sydney and Perth), pricing dictates to them that investing prior to buying in their desired suburb is typically essential in their wealth creation strategy.

The barrier that challenges the ‘First Home Buying Investor’ is whether to sacrifice the first home buyer benefits in order to invest, or whether to wait it out until they are ready to purchase their own principal place of residence (PPOR). The rationale behind state governments providing first home buyer incentives is to give ‘those who need it’ a boost in securing their own home. Because of this, investors typically miss out.

Since first home buyer incentives are state government policies, they vary state to state. Grasping a comprehensive understanding in order to make informed investment decisions would of course require personal legal and financial advice, so the findings of this article are indicative only and do not take into consideration anybody’s personal legal or financial situation.

In Queensland, stamp duty concessions and cash grants are not available to investors, but the following is the case:

$15,000 ‘Great Start Grant’ is available for a newly constructed property under $750,000 if it will be the PPOR of the purchaser within 12 months of settlement and remains so for a minimum period of six months (with other limits and provisos available on the Queensland Office of State Revenue website).
A ‘Home Transfer Duty’ (stamp duty) concession of $8,750 is available for those whose first purchase is under $505,000 and being used as their PPOR upon transfer.

These incentives will not suit most investors, particularly if interstate, but are a consideration to take into account when taking the first step into property investment. Another factor, however, is of course that delaying this decision because of the hesitation of missing out on these incentives could cost you far more in the long term as growth continues while you sit on the sidelines.

Posted by Luke Graham, on 5th Aug 2014