FIRST HOMEOWNER GRANT: Penalties if you don’t meet criteria

Posted on May 22nd, 2009

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Current low interest rates and the increase in the government’s first homeowner grant to $21,000 for a new house purchase may be tempting, but you will have to repay the grant if you do not meet the eligibility criteria.

The residency requirement is that you move into the property within 12 months after completion and live there for a continuous period of six months.

If, after receiving the grant, you do not fulfill the requirements, you need to advise the Chief Tax Commissioner of what has occurred and repay the grant. You may have to pay a penalty as well as the grant amount.

To make matters worse, based on the recent stance of the Tax Office in court, you may have to pay tax on the capital gain when the property is sold, because you never used it as your main residence.

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