Author Archives: conserv

First Home Saver Accounts

If you are saving up to buy your first home, a First Home Saver Account might be just the thing you need to give your savings a boost to help you reach your dream of owning your own home faster!


A First Home Saver Account is a special account where the government will increase your savings by adding 17% of your contributions for the financial year, up to a capped amount. For the 2013-14 year this cap is $6,000 making t
he maximum amount that the government will contribute as $1,020.


There are lots of great benefits of these accounts

  • Free money contributed by the government
  • Make as many or as little deposits as you like each year, up to a maximum amount that the account balance can reach. This cap is $90,000 for 2013-14.
  • The money added by the government is paid in a lump sum once a year, usually around December.
  • You do not need to close the account when you reach the cap, however you can’t make further deposits and so the government contributions cease.
  • Other people such as mum and dad can also make deposits in your account
  • Earn interest on all the money in your account – that’s the money you, your parents and the government put in
  • You don’t have to report the interest on your tax return; the account provider pays the tax on these accounts, but make sure you ask if they are passing this cost onto you.
  • The money in this account is not included in income and assets tests for various government benefits such as family tax benefit
  • You don’t pay any tax on the money when you withdraw it.
  • A first home saver is an individual account, but you can buy a house with a partner whether or not they have a first home saver account.
  • You have a 14-day cooling-off period when you first open your account

There are also some not so great parts about the account which you will need to consider

  • You can’t salary sacrifice payments into your first home saver account.
  • The money that you save can only be used to pay the deposit on a home or land or other costs sustained when you buy or build your first home.
  • You have to keep the money in the account for a minimum period of time currently 4 years.
  • If you lose your eligibility to hold an account, do not buy a house or change your mind you cannot simply close your account, withdraw the money and spend it. The money must be transferred into a superannuation account, unless you are over 60.
  • You can’t make partial withdrawals.
  • You can’t take money out of a first home saver account even if you are experiencing financial hardship.

You need to have contributed at least $1,000 per year to your account in at least four financial years – the four-year rule. You need to be aware that you cannot access this money until you buy or build your first home, but if you are saving for that event then 17% government contributions is a fantastic investment.

Sound good? Wondering how you get one? Well to receive the benefits you must meet the following requirements:-

  • You must be aged 18 to 65 years old when you open the account
  • You must not have owned a house in Australia or Norfolk Island
  • You must be an Australian resident.
  • You must contribute at least $1,000 in four or more financial years
  • You must use your account funds to buy or build a home you will live in for at least six months.
  • You must withdraw all your savings before settling the purchase contract or completing the construction

First Home Saver Accounts were first offered on 1 October 2008, and now in 2014 many financial institutions are no longer offering these accounts. This may be because people are concerned about how locked in their money is, or it may be because they are not aware that the accounts exist. First Home Saver Accounts have fairly strict rules and so won’t be right for everybody, and not all first home saver accounts are the same, so as always before you choose an account, you should read the product disclosure statement provided by the financial institution.

Here is a list of Financial Institutions currently providing First Home Saver Accounts:-

  • AMP Bank Limited – ABN 15 081 596 009
  • Credit Union SA Ltd – ABN 36 087 651 232
  • Hume Building Society Ltd – ABN 85 051 868 556
  • Hunter United Employees’ Credit Union Limited – ABN 68 087 650 182
  • IMB Ltd – ABN 92 087 651 974
  • Members Equity Bank Pty Limited – ABN 56 070 887 679
  • Police Financial Services Limited – ABN 33 087 651 661
  • Railways Credit Union Limited – ABN 91 087 651 090
  • Teachers Mutual Bank Limited – ABN 30 087 650 459
  • The Police Department Employees’ Credit Union Limited – ABN 95 087 650 799
  • Victoria Teachers Limited – ABN 44 087 651 769
  • Wyong Council Credit Union Ltd – ABN 29 087 650 897
  • The Trust Company (Superannuation) Limited – ABN 49 006 421 638

When you buy or build your first home, you can withdraw your saving, close your account, and you will be that much closer to paying your mortgage back and owning your home debt free.

I hope that you have found this information helpful. If you wish to find out more about First Home Saver Accounts, please look at the following links, or contact your financial adviser to discuss the best plan for your circumstances. Best of luck with your saving goals.


http://www.ato.gov.au/firsthomesaver
http://www.homesaver.treasury.gov.au/content/default.asp
https://www.moneysmart.gov.au/managing-your-money/banking/savings-accounts/first-home-saver-accounts
https://www.moneysmart.gov.au/tools-and-resources/calculators-and-tools/first-home-saver-calculatorPage Content
http://www.hunterunited.com.au/savings-savings-accounts.html

Should I buy my property as Joint Tenants or Tenants in Common?

When you purchase a property in more than one name, you need to think about whether you wish to take the property as Joint Tenants or Tenants in Common.

This means that each purchaser must decide what they wish to have happen with their share of the property in the event that they were to pass away.

What Does Joint Tenants mean?

“Joint Tenants” means that the person that you purchase the property with has what is known as a right of survivorship. Meaning the deceased persons share in the property would pass straight to the surviving person, not via their will.
Joint Tenants must own the property in equal shares i.e. 50% each. There can be more than two people holding the property in this manner.

What Does Tenants In Common mean?

“Tenants in Common” means that the person that you buy the property with does not have right of survivorship. In this case a deceased persons share in the property would pass according to the terms of their will. If a person dies without a will their estate is distributed according to the Wills, Probate and Administration Act 1898.
Tenants in Common may own the property in whichever percentage of shares that they may chose i.e. 50/50; 60/40 or even 99/1. There can be more than two people holding the property in this manner

For example, if Mr & Mrs Smith are going to purchase a property in 50% shares each, then they need to think about what they want to happen to their share of the property if either of them were to die.

If they choose to buy as Joint Tenants, and Mr Smith was to die, then his 50% share of the property would pass automatically to his wife.

If they chose to buy as Tenants in Common, and Mr Smith died, then his 50% share of the property would be distributed via his will. So if Mr Smith had a child from a previous marriage and he wanted to leave the estate to them, he could do so this way.

If Mr & Mrs Smith chose to take the property as Joint Tenants, and then they break up in the future, the decision is not irreversible, even if they choose to keep the house. They can decide to split their tenancy by writing a letter to the Land Titles Office to say they now wish to hold the property as Tenants in Common. This may happen for example if Mrs Smith is going to remain living in the property with custody of their children, and it is an amicable break up of marriage so Mr Smith is happy to remain as part owner so as not to complicate the financial situation for their family.

You can of course purchase the property with more than two people and choose from a mixture of the above tenancy options to suit your purposes.

It is definitely wise for you and your property partner to really consider what you want to have happen to your share in the property if one of you were to pass away, as this decision is recorded on your Title Deed when you purchase a new property.

What are Improvements, Inclusions and Exclusions in Conveyancing?

When you buy a property in NSW, what you are really buying is the land.
So when you are looking at that four bedroom house with the beautiful polished floors, an amazing chandelier in the foyer and with a wooden cubby house in the back yard, what you are really purchasing is a plot of dirt.

That’s why it’s so important to go through the contract in detail and really specify what you expect to be on that plot of dirt when you hand your money over!

On the NSW Contract for Sale of Land, what you want and what you don’t want are set out in three clear sections – Improvements, Inclusions and Exclusions.

IMPROVEMENTS
Improvements are the structures that have been built on the land. This is where we specifically list what you are buying, for example a House, or Home Unit, a Garage or Carport. If you are buying vacant land, this will also be stated in this section.

INCLUSIONS

Inclusions are a list of all the items in the house that you expect to remain in the property when you take ownership. Standard inclusions noted on the Contract are blinds, built-in wardrobes, clothes line, curtains, dishwasher, fixed floor coverings, insect screens, light fittings, range hood, stove, pool equipment and TV antenna. Some other common examples are air conditioner, ceiling fans, gas heater, security system etc.
Occasionally you may make an agreement with the seller to buy something that belongs to them and is not really a part of the house, so for example if there are not built in wardrobes in the property, you may agree to purchase a free standing wardrobe that they have in the bedroom as part of the Contract.
The idea here is to be as specific as you can about what you expect so that there are no surprises on settlement.
We have had clients on the day of settlement disappointed about comparatively small things, for example the owner removing tomato plants from the garden. If you really want that tomato plant, or chandelier, or whatever it may be for you, the best thing you can do is write it down on the Contract so you know exactly what you are getting and there are no arguments or unnecessary stress on settlement.

EXCLUSIONS

Exclusions are a list of anything that you specifically want taken off of the property before it becomes yours. Examples may be an aviary in the yard or a built in workbench in the garage if you plan to use that space for something else.
This is also the place that the owner may tell you if they plan to take something that you may have thought was included. In this case it would normally be something of sentimental value for example the owner wants to keep the curtains in the bedroom as they were made for them by their mother, or perhaps they wish to move the cubby house to their new home.

The whole system is designed to make sure that you know exactly what to expect on the day of settlement.

Remember, ambiguity is the enemy of the law, so take the time to set out exactly what you and do not want on your Contract.

Why wouldn’t settlement take place on the Contract date?

What reasons could settlement be delayed?
Can you guarantee the settlement date?

These are some of the most common questions I get asked during a conveyancing matter. Of course – I completely understand why! You need to know what date you’re getting your money, what day you need to book the removalist for and bribe all your friends to help you move. It’s one of the most important factors for you when you are buying or selling property.

Unfortunately I can’t guarantee the settlement date any more than I can guarantee that I personally will be alive tomorrow to help you with your conveyancing. I certainly plan to be – but some things are just outside of our control – and I only make guarantees that I know I can honour.

With the property market starting to heat up, and particularly just after the Christmas break, I’ve noticed an increase of properties not settling on the agreed date under the Contract. This is probably caused partly by buyers entering into Contracts before they were ready in fear of missing out on the property to somebody else, and partly by losing some of the working days over the Christmas break for conveyancers, solicitors and banking institutions to process their paperwork in time for the settlement date.

In January we had 6 files not settle on the agreed Contract date and for each file the reason was because either the discharging or incoming mortgagee was not ready.

So the best lessons we can learn from these facts is that you should have your pre-approval ready with your chosen financial institution before you go looking at property, and then when you find the right house tell them straight away so they can give you the formal unconditional approval on that property. Find somebody accountable, it helps if they are also local, that you can check in with at your bank or building society so you can make sure that they will be ready for settlement.

You certainly can’t choose the timing of finding the right home, or the right buyer for your home, but if it happens around Public Holidays, consider lengthening the Contract time a little to allow financial institutions sufficient time to be ready. This may mean that settlement is a little longer than you would have ideally wanted, but you will be more likely to have your settlement go through on the intended date. Particularly if you are exchanging Contracts with your Real Estate Agent, you could suggest this option to them, and call your Conveyancer and lender before exchange to ask if they believe they can meet the expected settlement date. For example, over this past Christmas break our office returned to work on 2 January 2014, most other firms returned on 6 January 2014, and some didn’t come back until 20 January 2014. Everybody deserves a holiday, but obviously the amount of working days dictate when the matter will be ready for settlement, and this is a problem that can be foreseen, and worked around to give you a more reliable settlement date.

Lastly, be aware that even if every person does everything right – your property matter may still not settle on time.
Unfortunately disasters do happen from time to time and may mean that settlement is delayed, for example: – If the tenant doesn’t move out; if a caveat is lodged to say a person has an interest in the property; if the property is vandalised, or has storm damage, or if there’s a fire in the property.

But rest assured that the vast majority of property settlements do, in fact, take place on their Contract date.

Benefits available in 2014

As we start a new year with wonderful possibilities you may be wondering if it’s the right time for you to buy or sell this year. Interest rates are low, the housing market is strong and there are a number of grants that are available in 2014 which you may be eligible for to help you on your way.

The government, unfortunately, is not currently offering very supportive incentives to First Home Buyers to assist them in taking the first step into the property market, which I strongly hope they reconsider. For now the only benefits available are for First Home Buyers who can afford to buy a brand new home, or a vacant block of land to build their first home. If you are one of these lucky first time home buyers you may be eligible for free stamp duty, and a $15,000 Grant.

For people buying a brand new home, whether you are upgrading, downsizing or an investor, there is a $5000 New Home Grant available. Also, for people moving from a metropolitan area and buying a home in a regional area there is a $7000 Regional Relocation Grant.

Sometimes that little bit of extra assistance can really make a difference, so I’ll summarise the benefits available in 2014 for your consideration.

First Home – New Home scheme

First Home Buyers purchasing a brand new home under $550,000 can apply for an exemption from Stamp Duty, or if the purchase price is between $550,000 and $650,000 you can apply for a discount on your Stamp Duty under this Scheme.

 

If you are buying a vacant block of residential land to build your first home for under $350,000 you can apply for an exemption from Stamp Duty, or if the purchase price is between $350,000 and $450,000 you can apply for a discount on your Stamp Duty under this Scheme.

 

First Home Owner Grant (New Homes) scheme

First Home Buyers purchasing a brand new home, or vacant block of residential land to build your first home for under $650,000 can apply for the $15,000 First Home Owner Grant (New Homes) under this scheme.

To be eligible for the First Home New Home Scheme, or Grant above:

  • at least one buyer must be an Australian citizen or permanent resident
  • the agreement must be for the purchase of the whole property
  • you must be a natural person (not a company or trust)
  • you must be over 18
  • the home is a brand new home
  • you or your partner have not previously owned property in any form in Australia
  • at least one purchaser must occupy the home within 12 months and needs to live in the home for a continuous period of at least 6 months.

New Home Grant scheme

If you are purchasing a brand new home (including “off the plan”), or vacant land on which a new home will be built then you can apply for the $5,000 New Home Grant under this Scheme. The Grant is paid by reducing your Stamp Duty costs, and if there is any money left over, then this would be paid to you by cheque.

 

There are no restrictions on the number of times you can apply for the Grant, so if you are an investor considering purchasing more than one new home, then you can apply for the $5,000 New Home Grant Scheme each time! You can be a natural person, a company or trustee of a trust, and the grant is available to investors as well as owner occupiers.
To be eligible for the New Home Grant:

  • Applications must be made within 3 months of the date of exchange of Contracts.
  • The value of the new home must not exceed $650,000 and the value of vacant land must not exceed $450,000.
  • For vacant land, construction of the home, by way of laying foundations, must commence within 26 weeks after settlement of the purchase. However, there is no limit on the time of construction.

Regional Relocation Home Buyers Grant
If you are purchasing a residential home in a Regional “Country” Area and selling your current home or moving from a rental property in a Metropolitan “City” Area then you can apply for the $7,000 Regional Relocation Home Buyers Grant. There is no price limit on sale of the metropolitan home. Application for this grant can be made after purchasing the regional property and your name is on the title deed. The Grant is paid electronically into your account within 21 days from application.

This is a list of Metropolitan “City” Areas:

  • the Sydney metropolitan area (incl Ashfield, Auburn, Bankstown, Blacktown, Blue Mountains, Botany Bay, Burwood, Camden, Campbelltown, Canada Bay, Canterbury, Fairfield, Gosford, Hawkesbury, Holroyd, Hornsby, Hunters Hill, Hurstville, Kogarah, Ku-ring-gai, Lane Cove, Leichhardt, Liverpool, Manly, Marrickville, Mosman, North Sydney, Parramatta, Penrith, Pittwater, Randwick, Rockdale, Ryde, Strathfield, Sutherland Shire, Sydney, The Hills Shire, Warringah, Waverley, Willoughby, Wollondilly, Woollahra and Wyong)
  • the Newcastle local government area
  • the Wollongong local government area.

Regional “Country” Areas are participating local government areas outside the above, and if you are uncertain of the Council Area for the home you are selling or buying, you can conduct a ‘Local Council Search’ through the Division of Local Government website. Please note that the Byron local government area, although regional, opted out of the scheme.

In 2014 they have broadened the Grant so that where the metropolitan home is sold and 2 regional properties are purchased, applications for both properties may qualify. However in 2014 they have also applied a minimum distance requirement of 100 km between the metropolitan home and the regional home to be eligible to receive the grant.

To be eligible you must:

  • be a natural person (not acting in the capacity as trustee)
  • at least one applicant must be an Australian citizen or permanent resident.
  • have bought a regional property for less than $600,000 for a home, or less than $450,000 for vacant land.
  • start living in the regional property within 12 months from the purchase, for at least 12 continuous months. If you have purchased vacant land you must commence construction of your home within 6 months and be residing in the home within 12 months of the date of purchase
  • have lived in your metropolitan home in the 12 months before purchasing your regional property. The metropolitan home must be sold in the 12 months before or after the purchase of the regional property, OR
  • have been renting a home in a metropolitan area in the 12 months before purchasing your regional property and can establish a 2-year continuous rental history in this and other metropolitan homes.

The above information has been simplified to make it easier to understand. There are however, firm requirements that must be met to be eligible for each benefit so if you would like to know more please contact the Office of State Revenue http://www.osr.nsw.gov.au/contact or I would love to hear from you.

I encourage comments and also invite you to be involved and ask any questions or suggest a future topic.

Helpful Link

 

http://www.osr.nsw.gov.au/grants