At Penrose Real Estate, we're always looking to bring you the latest updates that affect property owners and buyers. This week, Christina sat down with Louise Mifsud, Property Lawyer at NB Property Law to break down the recent changes to Queensland's transfer duty laws and what they mean for first home buyers.
The Big Change: What's Different Now?
The property market can be daunting for first home buyers. But there's been an exciting change that could help you with buying your first home, as Louise explains:
"Recent changes to Queensland's transfer duty laws bring welcome relief for homebuyers, particularly first home buyers. Effective from 10 September 2024, buyers are now allowed to rent out a room or part of their property without forfeiting their eligibility for the first home transfer duty concession - provided they continue to live in the property and of course, meet the eligibility requirements."
Before diving deeper into the changes, we asked Louise to clarify exactly who can take advantage of this opportunity. She explains that to be eligible for the first home concession you need to be:
- Legally acquiring the property as an individual
- At least 18 years of age
- Someone who has never claimed the first home vacant land concession
- Someone who has never held an interest in another residence anywhere in Australia or overseas
- Prepared to move in with your personal belongings and live there on a daily basis within 1 year of settlement
Financial Benefits for First Home Buyers
When we asked Louise about the financial advantages, she broke it down into three key areas:
Transfer Duty Savings
"The savings here are substantial," Louise explains. "First home buyers can save up to $24,525 on properties under $700,000. That's real money that does not come out of your pocket when you settle."
Rental Income Potential
"This is where it gets exciting," she continues. "Now you can have that spare room working for you from day one - whether it's a long-term roommate or short-term stays." That extra income from renting your room can help with any upgrades to the property, managing day-to-day costs or adding extra payments to your home loan.
Mortgage Stress Relief
"In today's market, every bit helps," Louise emphasises. "That extra income can make a real difference, especially with the rising cost of living."
The Fine Print: Important Details
It is important that you meet the criteria and understand how the changes would apply to your circumstances before leasing a room. As Louise explains: "Buyers must still move into the property first - that's crucial. You're not able to lease, rent or otherwise grant exclusive possession of all or part of the property before you move in," she clarifies. "But after you move in, you can lease, rent or otherwise grant exclusive possession of part of the property, provided the arrangement commences on or after 10 September 2024 and you remain living in the property."
To help illustrate how these changes work in practice, Louise shares a recent success story:
"Take James, for example," she says. "He purchased his first home in 2024 and moved in after settlement. In December, he decided to make a room available for short-term stays. The additional income has helped him make extra mortgage payments, and because he meets all the eligibility requirements, he didn't even need to notify the Queensland Revenue Office. He's still entitled to the home concession."
Capital Gains Tax Considerations
When discussing the tax implications of renting out a room, Louise highlighted an important consideration: "Yes, renting out a room would make capital gains tax payable, but you should still be able to claim part of the main residence exemption." She emphasises that the tax implications can be complex and vary based on individual circumstances. "It's crucial to consult with your accountant regarding the specific tax implications and potential benefits of renting out part of your property. They can provide tailored advice based on your situation and help you understand how it might affect your capital gains tax position when you eventually sell."
Frequently Asked Questions
During our chat, Louise addressed some common questions:
- Can I rent out the whole property?
"No, you must continue living in the property while renting out a portion of it."
- Do I need to notify anyone about renting out a room?
"As long as you meet the eligibility requirements and only rent out part of the property after moving in, there's no need to notify the Queensland Revenue Office."
- What if I bought my property before September 2024?
"You can still take advantage of these changes, provided you meet all other eligibility criteria."
Before wrapping up our chat, we asked Louise for her final advice to first home buyers:
"The updates to the transfer duty rules reflect the Queensland government's broader strategy to make homeownership more accessible while addressing the challenges of the local rental market," she explains. "However, navigating these changes requires careful planning and expert advice to make sure you meet the criteria."
Initiatives such as the First Home Buyers Transfer Duty Concession are designed to assist you in getting into your new home sooner. However, it is always important to make sure you understand the long-term implications when you buy a home. If you are looking at buying your first home, chat with your mortgage broker and property lawyer to understand any incentives you may be eligible for and all the costs associated with your purchase.
If you have questions about transfer duty and your conveyancing matter in Queensland, you can reach out to the property team at NB Property Law for a chat on (07) 3876 5111.
Our Commitment to You
At Penrose Real Estate, we're excited about these changes and what they mean for our first home buyers. If you're thinking about purchasing a property and want to understand how these new rules might benefit you, we're here to help you navigate these changes and find the perfect property for your needs.
Pop in for a coffee and a chat about your first home buying journey - we'd love to help you make the most of these new opportunities. Alternatively, feel free to visit our website at Penrose Real Estate.