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Eligibility - Exception for Investment Property

Initiate

Views 467

Replies 6

Looking for advice on whether any exceptions to this criteria are considered as simply due to timing, this is limiting opportunity to get into the market and build a financial base for the future.

 

First home buyer, has never owned/had interest in any property, yet.

Actively trying to buy first home in Canberra. The property market is crazy there and it's proving difficult to find a home.

Want to get on the ladder so also looking to buy an investment property in Brisbane. Able to look at property in Brisbane in the next 4 months (relocating from Brisbane to Canberra in September this year due to work). The property market here is much more reasonable right now. Cannot live here or qualify for FHSS on this home (due to 6 month criteria) and would look to buy in Canberra soon after and use the FHSS then.

 

Because of this eligibility criteria the FHSS benefit is lost due to a short difference in time and two different markets.

Previously, various first home support schemes have not had exclusions for investment - only as long as another property hasn't been lived in. It's taken a lot of hard work to try to get into this market and I believe investing shouldn't be discouraged. Sometimes this is one way that first home buyers can get into the market while the areas they live in aren't as affordable or accessible to them.

Thank you.

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Certified Response

Devotee

Replies 4

Hi QuestionMaster

 

Blake is right, but the response is based on the assumption that you'd be applying for the FHSS release after having purchased the investment property.

 

If on the other hand you have the FHSS amount released before you've bought any property then you'd be eligible to receive the release.

 

Once the money is released the 12 month timer would then start to buy a home. If you happen to buy an investment property before you buy a home, but you buy both after the release of the money, and within 12 months of the money being released you'll be eligible to have the money released and also won't be required to pay FHSS tax.

 

You'd be able to apply for a time extension to buy a first home if you still can't find a place to buy in Canberra within 12 months of the release.

 

It's possible / likely that someone from the ATO would contact you after you buy the investment property, to ask why you haven't notified the ATO of having purchased a home. If this occurs you'd need to explain the situation to them - ie it's an investment property, you haven't bought a home yet, are still looking.

 

I'm an ATO employee voluntarily providing my time here

6 REPLIES 6

ATO Community Support

Replies 0

Hi @QuestionMaster

 

The only exceptions for being eligible under the FHSS scheme when having previously owned property is under financial hardship. There are no exceptions for demonstrating you genuinely intend to occupy the home as your home. This is legislative, written in Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Act 2017.

 

Once you release your FHSS amount, you have 12 months to use the funds to purchase your first home. You also don't have to release your funds until you're ready to use them (so long as you release them before signing a contract for property). It seems like you may be better suited under this scheme to wait until you find a home in Canberra, if that's where you intend to reside as your home.

 

If you do not agree with the legislation or wish to see it change, you should speak to your local member of parliament.

 

You can read Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No. 1) Act 2017 on our legal database.

Most helpful response

ATO Certified Response

Devotee

Replies 4

Hi QuestionMaster

 

Blake is right, but the response is based on the assumption that you'd be applying for the FHSS release after having purchased the investment property.

 

If on the other hand you have the FHSS amount released before you've bought any property then you'd be eligible to receive the release.

 

Once the money is released the 12 month timer would then start to buy a home. If you happen to buy an investment property before you buy a home, but you buy both after the release of the money, and within 12 months of the money being released you'll be eligible to have the money released and also won't be required to pay FHSS tax.

 

You'd be able to apply for a time extension to buy a first home if you still can't find a place to buy in Canberra within 12 months of the release.

 

It's possible / likely that someone from the ATO would contact you after you buy the investment property, to ask why you haven't notified the ATO of having purchased a home. If this occurs you'd need to explain the situation to them - ie it's an investment property, you haven't bought a home yet, are still looking.

 

I'm an ATO employee voluntarily providing my time here

Initiate

Replies 3

Seb,

 

Thanks! This was going to be my next question. This could definitely be a solution. Appreciate the advice.

Community Manager

Replies 2

Hi @QuestionMaster 

 

Our FHSS team has had a look at this and wanted to add a little more information.

 

Under the FHSS scheme, your eligibility is established at the time you request your FHSS determination via your responses to the questions on the form.

 

In this case, you would need to request your FHSS determination before signing a contract for any property – this includes vacant land, investment property or to purchase or construct your home. Once you have signed any property contract (this is not settlement) you cannot request a new determination because you would be ineligible for the scheme.

 

When you’ve received a FHSS determination, you can request that the FHSS money be released. You have up 12 months from the release request date to sign a contract to purchase or construct your home. If you have not signed a contract and notified us within the first 12 months, we will automatically grant you a extension of time for an additional 12 months (i.e. 24 months in total from the release request date) to sign a contract to purchase or construct your home. You do not need to apply for this extension of time.

 

If you sign the contract for both your investment property and home after the FHSS determination then you are still eligible for the FHSS scheme.

 

It is important that when you make your FHSS notification, that it is made in respect of the property you purchased as your home. The notification must be made within 28 days of signing the contract for your home. You can make the FHSS notification via our online services – you will need to provide the date the contract was signed and the address of the property.

I'm new

Replies 1

Thanks Nate for the detailed responce. I wish it clear before I started putting my money into super for my first PPOR.

I have a question, I am in the same about and I have signed the contract, which makes me ineligible. I wonder what penalties do I have to pay if I request for release?

TA

 

Devotee

Replies 0

Hi Anseeker

 

If you're not eligible to have the money released from super, you can't have the money released from super. There's no part of the super law that lets you take money out as long as you're willing to pay a penalty tax.

 

That's the risk with FHSS. If you don't pay attention and become ineligible to have your super released, it's stuck in super until retirement.

 

So unless there's a way you can get out of the contract, apply for the FHSS release, and re-sign the contract, you won't be eligible for FHSS.

 

I'm an ATO employee voluntarily providing my time here