Excerpts taken from Office of State Revenue website.

PROPERTY VALUE CAP

On January 1 2010 the Western Australian government introduced a cap on the maximum Total Property Value (TPV) eligible under the First Home Owner Grant. The TPV is the total value of the house and land component of the transaction.

The cap applies to all eligible transactions in Western Australia made on or after 1 January 2010.

The eligible transaction date for:

* Established, New or Off the Plan homes - is the date the contract is made.
* Contracts to Build - is the date the building contract is made.
* Owner Builders - is the date foundations are laid.

The cap varies depending upon the location of the property with the dividing line being the 26th parallel. The TPV of a home must not exceed $750,000 south of the parallel or $1,000,000 north of the line.

The TPV is determined dependent upon the type of dwelling:

* Established, New or Off the Plan: greater of the contract to purchase or unencumbered value.
* Contract to Build: total price of the building contract and unencumbered value of the land.
* Owner Builders: unencumbered value at the date the transaction is completed (i.e. total value of home and land).


VALUATIONS NEEDED FOR RELATED PARTY TRANSACTIONS

The new legislation will also impact Related Party Transactions (i.e. where an applicant or their spouse/de facto partner is related to or associated with the vendor or builder) as a valuation of the land and/or home may be required to establish a reasonable appraisal of the TPV.

A related party means:

* One is the spouse/de facto of the other; or
* They are related by blood, marriage, adoption; or
* They are a Shareholder or Director of the other party, being a company; or
* They are a Beneficiary of a trust for which the party is a trustee; or
* The transaction is otherwise not at arms length.


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