A close friend of mine recently told me her parents were wanting to buy an investment property in her name to get access to the FHOG before it expires (we are in Victoria). She is currently at uni, lives with her parents, works casually 2 or 3 shifts per week and gets youth allowance.
She is a bit panicked because this is happening very quickly and she is nervous about the implications it will have on her own situation (youth allowance, ability to borrow in the future etc).
I am hoping somebody can fill me in on the implications for my friend. My current (limited) understand is:
- She will lose the youth allowance given it is means tested on assets (will this change if the property is highly geared with minimal equity?)
- She won't be able to get any FHOG in the future
- Depending on how much the parents borrow to fund the property, she may have trouble getting finance for her own property in the future
- She will not be able to claim the main residence CGT exemption on the property given it will be rented out straight away
- She will be liable if her parents don't make the mortgage payments thus credit history could suffer
- She will be legally liable for all taxes levied on the property (land tax, rates - have I missed any?)
If anybody can assist, that would be greatly appreciated. Really just hoping to understand the implications for her, not her parents.
Given that properties will probably all drop in price by some large fraction the value of the FBH allowance the moment it disappears, why would you rush into a purchase just to get it?
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
If your friend is over 18, has permanent residency, is buying for less than $750,000, and will live in the property for at least 6 months, and that period of occupancy is within or commences within the first 12 months, then she should qualify for the FHOG.
However a student with two casual jobs is very unlikely to get finance unless her parents guarantee her income, and put up a decent deposit.
I think that it is a crazy thing to do unless it is a cheap pad for the daughter, and she wants this to happen. At a time when capital gains will be rare it just doesn't make sense to buy property just for the sake of owning property, especially if she is a young student. Transaction costs preclude that from being a winning strategy especially when she gets no real NG advantage, and the property may not suit her future requirements, and needs can change quickly for a young girl in her twenties.
Any expressed market opinion is my own and is not to be taken as financial advice
If your friend is over 18, has permanent residency, is buying for less than $750,000, and will live in the property for at least 6 months, and that period of occupancy is within or commences within the first 12 months, then she should qualify for the FHOG.
However a student with two casual jobs is very unlikely to get finance unless her parents guarantee her income, and put up a decent deposit.
I think that it is a crazy thing to do unless it is a cheap pad for the daughter, and she wants this to happen. At a time when capital gains will be rare it just doesn't make sense to buy property just for the sake of owning property, especially if she is a young student. Transaction costs preclude that from being a winning strategy especially when she gets no real NG advantage, and the property may not suit her future requirements, and needs can change quickly for a young girl in her twenties.
You come across so well when you are talking about something you know about....listen to this man,...........on this subject.
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