In Australia, we have the First Home Owners Grant (FHOG) to help young people to get into the property market and out of rentals.

The First Home Owners Grant has been around for over a decade now, and normally, if you and any partners/co-owners haven't owned a property that you've lived in before (as long as you bought it after July 1, 2000), the First Home Owners Grant entitles you to $7000 towards a deposit and an exemption from Stamp Duty to the tune of another $7000.

For a while, that amount was even higher. Since the economic downturn and the advent of Australia's rental squeeze, the Australian Government has doubled the Grant to $14,000 for people buying existing houses as first homes, and tripled it to $21,000 for those prepared to build new. Most states still provided an exemption from Stamp Duty on first homes (if they charged Stamp Duty at all), and some, like New South Wales, offered extra incentives to build new. In NSW, you got an extra $3,000, bringing the total grant to $24,000 cash plus exemptions.

The First Home Owners Grant Boost was extended until the 31st December 2009. The $14,000-$21,000 grant went until September, and then dropped by half (of the boost amount) to $10,500 for existing buildings and $14,000 for new builds. Originally, this was only available to people buying properties under $500,000, but now this ceiling has been raised (after a decade) to $750,000

There is a catch to this: You must use a property you claim the First Home Owners Grant on as your PPOR (see glossary) for at least six consecutive months out of the first twelve months that you own it. This may be extended to six consecutive months after completion if you are building a new house on the property. Depending on which state you live in, too, you may need to live in your property for the full 12 months in order to get the stamp duty exemption on it (although this varies).

So you cannot simply buy a property with the First Home Owners Grant, live in it for a month, and then change your mind and move out. Nor can you really get away with having all your mail redirected to the property while you're living somewhere else. Some have tried and most have failed because the government does actually check.

There are ways, however, that you can claim the FHOG and use the property as an investment later. As long as you're prepared to shack up in it for at least six months!

Our first home came to us by an even more complicated route.

When we bought it, we bought because the rental squeeze meant we couldn't actually get a place to rent. My husband was an apprentice, and I was a new mum who was working sporadically from home while looking after our baby daughter, when our landlord decided that he needed to move back into his rental property with his new wife. Thanks to our fairly poor financial situation and the fact that there were many more and "better qualified" (financially - I actually have a degree!) people applying for the properties we wanted to rent, no-one would accept us even with our exemplary rental record and a guarantee from my parents, who ended up attempting to put their own names on leases as we ran out of time to move out of our old place.

I actually had a deposit for a home, saved for me by my grandma from when I was a baby. I'd always promised her that I would use it for that purpose and nothing else.


I had learned some interesting and unusual strategies for property investing from my wide reading, and during a course run by 21st Century Education. My father had come along with me to the course and seen the potential, and with the price of decent rentals being close to that of mortgages in the part of Sydney where we decided we could afford to buy and bear to live (there are some suburbs that aren't even worth considering!), we all sat down one night and decided to buy a house together, as a family.

If we had put our own names on the mortgage, along with my father's, we would, however, have been ineligible for the FHOG, because he had already owned property before.

So the solution for us was to give my father the deposit, bite the bullet and pay the stamp duty (you win some, you lose some!), and then rent the house back off him in a vendor finance agreement for up to five years, or until our income became such that we could buy it outright in our names, thus claiming the First Home Owners Grant.

Our bet at the time that the Grant would increase by the time we bought out actually paid off, so we weren't so unhappy about the stamp duty when we bought it the "first time". In the meantime, we were able to do renovations to bring the property up to a more livable standard (I wouldn't have rented it as a tenant - we bought it because we could actually do something with it to improve it, as it had a good layout, but was really rather disgusting, but solid, inside when we did buy!).

This added value to the property and increased our equity, effectively accelerating the amount we owned on top of what we were paying off the principle. We also achieved some capital appreciation of the property over time.

When it came time to buy the property out, we had gained tens of thousands of dollars in equity. Adding the First Home Owners Grant to that equity - as well as what we had already paid off in rent to my father - meant that we had a really significant deposit to shift the mortgage into our names.

This was much more of a deposit than we would have had trying to save up, because the money we spent instead on the property added even more value than interest from a savings account ever could.

Once the property was in our possession, it only remained to stay in it for another 6 months, and we had the option of moving on and keeping the property as an investment. But that's another story to be told elsewhere.

Useful Links

If you want to learn more about the FHOG and how to claim it, visit this site.

Are you a First Home Buyer? The First Home Buyers Guide is a site providing useful information and a step-by-step process, just for you.


Questions Asked about this Subject:

Can I rent out a spare room if I have the FHOG?

Do you have a question about the FHOG?

So... ask away!

Do you have a question about property investing that's not answered here or elswhere on this site?

Ask it here and we'll try our best to answer it for you. Sometimes there's some research involved, so please forgive us of we take a little while to post back.

Others can also comment (politely, please!) too and help you out. It's a bit like a forum and FAQ rolled into one!

Just remember, we're not financial advisers, so you should use the information we give here as a guide only (in relation to your personal circumstances) and see an accountant or financial adviser before proceeding further.

What Other Visitors Have Said

Click below to see contributions from other visitors to this page...

Can I rent out a room to my relative within 6 months if I have received the FHOG? 
I read your questions and answers, very helpful. However, I still want to ask further if I could rent a room to my relative after 3 months of the property …

FHOG 2015 Eligibility 
Hi I am writing to check on the following situation: - I have a land which I initially bought with the intent to build my first home in. It has been …

WHAT DO I DO. Sell the property?? 
I plan to buy the property under my name and was approve the First Home Owner Grant and intend live with my partner who is not a resident. However the …

First Homeowner paying cash for whole house. 
Can someone buying a house outright get the first homeowners grant?

Can I rent out my spare rooms if I apply for both FHOG and Home Buyers Assistance Account 
Hi, I have bought a house and had sucessfully applied for both the FHOG and Home Buyers Assistance Account. There are currently 3 vacant spare rooms …

Renting after the first homebuyers grant 
Can I live in a rental property again after I claim the first homebuyers grant?

Can I co-own a rental property and receive the FHOG when I buy the outstanding share of the property? 
If I was to co-purchase an investment property with my parents, and subsequently purchase their share of the property when I am able to afford it, am I …

Display home 
Can u claim fhog if u purchase a display house that has never been lived in

Renting a room during the 6 months FHOG period. 
If i built a new house.. got the 21,000 and im livin in the house.. can i rent out a room to sumone or its that not allowed untill the 6months is up..

My landlord wants to claim the first home owners grant... 
I'm renting a property privately, and my landlord has asked if I can help him claim the first home owners grant. It doesn't sound right to me...

Criteria of Principal Place of Residence Not rated yet
Hi, I am currently living in Victoria (Victorian residential address) but spend about 80% of my time in Sydney (I am renting a place there). I am …

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