Ambitious young people who want to build an investment property portfolio should move now and use the first home owner grant as a kickstart, leading property investment expert Paul Bennion said today.
Mr Bennion, the managing director of property depreciation firm DEPPRO Asia Pacific, said there was still some confusion in the community about who qualified for the grant – and what they could buy.
But with time running out to claim the increased $14,000 grant, he said it was important to understand the rules if you wanted to enter the property market.
“The first home owner grant is available to owner-occupiers – that is, those who buy a home to live in straight away – rather than investors,” Mr Bennion said.
“But it is perfectly legal for would-be investors to grab the grant, live in the home for a short qualifying period (only six months in most states), and then rent it out.
“It’s a win-win investment strategy if you haven’t owned your own home before – you get a $14,000 kickstart from the Federal Government (or $21,000 if you are building a new home), you get to live in your own place rent-free for at least six months and then you can rent it out and have someone else help pay off the loan.”
Conversely, Mr Bennion said it was important for young people who already had an investment property to realise that they could still be eligible for the first home owner grant if they’d always rented their own accommodation – or still lived at home with mum and dad.
“We see many young people who make a lifestyle and financial choice to rent in the innercity, close to where they work and socialise, and buy a property a bit further out for investment purposes.
“If they now want to claim the grant that’s fine, provided they’ve never actually lived in a home that they own.”
Mr Bennion said Australia’s property market owed a lot to young people who were buying their first home.
“It’s this group that is really keeping things moving,” he said.
“Latest figures show almost 5500 households took advantage of the increased grant in the first month it was introduced and that’s a trend that needs to continue for the health of the economy.
“I call on the Federal Government to extend the increased first home owner grant past the current deadline of June 30 this year.”
Mr Bennion said DEPPRO had many young clients who came to them for depreciation reports on their investment properties to help maximise their tax returns.
DEPPRO prepares professional depreciation reports for clients that can net them thousands of dollars in depreciation to deduct from their tax return, but still meet the strict Australian Tax Office guidelines.
