First Home Owner Grant Property Value Cap
Legislation: First Home Owner Grant 2000
Date Issued: 19 January 2011
Information Circulars do not have the force of law.
As part of the State Budget handed down on 16 September 2010, the Government announced that the First Home Owner Grant (FHOG) will no longer be available where the market value of a property exceeds $575,000. This is known as a property value cap.
The Statutes Amendment (Budget 2010) Act 2010, which was assented to by His Excellency the Governor on 18 November 2010, amends the First Home Owner Grant Act 2000 (the “Act”) with effect from 17 September 2010.
The new Intergovernmental Agreement on Federal Financial Relations (IGA) signed in December 2008 allows states and territories to impose a cap on the market value of homes eligible for the FHOG. The cap cannot be less than 1.4 times the relevant jurisdiction’s capital city median house price. The Adelaide median house price as at the June quarter 2010 was $410,000. The cap will be reviewed annually once the June quarter median house price data is available from the State Valuation Office.
Property Value Cap
If the commencement date of an eligible transaction is on or after 17 September 2010, the FHOG will not be available where the market value of the home exceeds $575,000.
The commencement date is determined as follows:
|in the case of:||the commencement date is:|
|a contract for the purchase of a home||the date the contract is made|
|a comprehensive building contract with a builder||the date the contract is made|
|the building of a home by an owner builder||the date when laying the foundations for the home commences, or another date the Commissioner of State Taxation (the “Commissioner”) considers appropriate in the circumstances of the case. The Commissioner considers that laying the foundations occurs on the date the concrete slab is laid.|
An ‘eligible transaction’ in regard to the FHOG is:
- a contract made on or after 1 July 2000 for the purchase of a home;
- a comprehensive home building contract made on or after 1 July 2000 by the owner of land, or a person who will on completion of the contract, be the owner of land, to have a home built on the land; or
- the building of a home by an owner builder if the building work commences on or after 1 July 2000.
The market value of a home to which the eligible transaction relates is:
- in the case of a contract for the purchase of a new home:
- the consideration for the purchase of the property (land, home and any other improvements); or
- where that consideration is less than the market value, then the market value of the property (land, home and any other improvements) on which the home is situated as at the time when the contract is made as determined by the Commissioner.
- in the case of a comprehensive home building contract:
- the sum of the consideration for the comprehensive home building contract and the market value of the property (land) on which the home is to be built as at the time when the building contract is made; or
- where the consideration for the relevant building work is less than the actual costs to build the home, the sum of the actual costs to build the home as determined by the Commissioner and the market value of the property (land and any other improvements) on which the home is to be built as at the time the building contract is made as determined by the Commissioner.
- in the case of the building of a home by an owner builder:
- the market value of the property (land, home and any other improvements) on which the home is situated as at the time the home is completed and ready for occupation as a place of residence as determined by the Commissioner.
To avoid doubt, the market value of any property on which a home is situated will be the market value of the land, the home and any other improvements.
Market Value of a Home on a Genuine Farm
If the eligible transaction relates to a home on a ‘genuine farm’, for the purposes of determining the market value, the ‘relevant component’ of the farm is taken to constitute the property on which the home is situated, or is to be built.
‘Genuine farm’ means land as to which the Commissioner is satisfied:
- the land is to be used for primary production by the first home owner; and
- the land is, by itself or in conjunction with other land owned by that person, capable of supporting economically viable primary production operations.
‘Relevant component’ of a genuine farm means that part of the farm constituted by the home and its curtilage, or the part of the land that is to constitute the site and curtilage of a home that is to be built. Whilst ‘curtilage’ is not defined in the Act, the Commissioner considers ‘curtilage’ to be the area generally regarded as the house block of the property. Each case will be considered on its
Market Value of a Non-Conforming Interest
In the unusual situation where the first home owner is entitled to FHOG by virtue of the recognition of a non-conforming interest as a relevant interest via the operation of Section 5(4) of the Act, the market value is determined in accordance with Section 18BB(3) of the Act.
Market Value Methodology
The Commissioner may adopt or approve any method considered reasonable for the purposes of determining any value or costs in relation to market value, including by requiring that a valuation of property be made by a person appointed or approved by the Commissioner. In that situation, the Commissioner may, having regard to the merits of the case, charge the whole or any part of the
expenses of, or incidental to, the making of the valuation to the applicant(s) and may recover the amount so charged from the applicant(s) as a debt due to the Crown.
Whilst the Commissioner will generally accept a site value in the relevant year by the Valuer-General (as used for rating purposes) as the market value of land, the Commissioner will where necessary refer a matter requiring valuation to the Valuer-General.
False Claims and Penalties
There are substantial penalties for dishonestly providing incorrect or misleading information in connection with an application for the first home benefits. RevenueSA conducts investigations and compliance checks to ensure FHOG and First Home Bonus Grant benefits are only provided to applicants entitled to receive them.
RevenueSA audits applications with current and historical data held by commercial organisations and by state and territory agencies.
How to Apply
Information on how to apply for a FHOG is available on the RevenueSA website.
View this Information Circular as a pdf (PDF 240KB)