This is Holly.
Holly has featured in such previous posts as the dog which was hoisted over a balcony to be smuggled into a pub.
She’s also one of the Swede’s favourite playmates, is a massive sook and has an obsession with a yellow ball that could stump Cesar Milan. She’s also not our dog. We don’t have a dog. She’s Steph and Chris’s dog. We love her anyway.
Holly is also at the heart of The Puppy Conundrum, which is as follows: When accommodating all the financial and logical advice, and weighing up the options, none take into account the inexplicable human desire to adopt a fur-child.
The Puppy Conundrum goes like this:
Theoretically, there is a squeeze on the WA homebuyers markets at three distinct points by first homebuyers, like us.
Point one is where our favourite State Government-imposed stamp-duty tax cuts in, at the $500,000-mark. Anything under half-a-million, and you’re conceivably saving $17,765 that a non-first-homebuyer would have to pile in a wheelbarrow and take over to the State Treasurer’s house, of which statistically 25 per cent will end up funding the WA public health system. Just sayin’.
Point two is just on the near side of the $600,000 mark. Up until that point, first homebuyers are getting a reduced stamp duty rate, which means the suggested $11,115 + $4.75 per $100 above $360,000 will be… less than it otherwise would be. Apparently*.
And point three – and thanks to Josh-the-savvy-next-door-neighbour for bringing this to my attention – is where the squeeze really starts to kick-in, around the $725,000 mark. This is where first homebuyers are still getting free money from the Government, and a slightly lower stamp duty rate. The First Home Buyers Grant is currently $7000, down from ~$20K in 2010.
According to this uni student, Josh, Scott Pape the Barefoot Investor, and various other experts I can’t be bothered referencing, all these First Home Owners Grant and stamp-duty breaks have done for punters like me is compromise the value for money we would be getting in some of the most affordable and sought-after value brackets, right at the point we would want to buy.
Thanks, Wayne. And Troy. That’s just awesome.
Taking the Purple Circle theory into account, which means I want to live near my mates and within 10km of the WA Rowing Club, if I want to get value for money for the property I want to live in for the next few years, I should probably be willing to take the tax hit and buy something like:
Property 1: Just above $500K, some sort of apartment or townhouse and just cough up the reduced stamp-duty rate.
Property 2: Just above $600K, some sort of townhouse with a courtyard and just cough up more stamp-duty.
Property 3: Pitch for just over $750K for some sort of aging 1920s 3 x 1 with a bit of a yard, thus giving up the first home-owners grant and copping an eyeful of stamp-duty. This would conceivably give us room for a fur-child but reduce the chance of trading-up in the next decade or so, and result in a bigger stretch financially.
My brain, and Josh-the-savvy next-door-neighbour, tells me what I should do in this situation is go for Property 1 or Property 2, get the benefit of the first homebuyers grant and maybe a reduced stamp duty tax, pay off as much of it as possible for a couple of years… and in the event the Swede and I make the lifestyle choices that are flooding my Facebook wall on a daily basis (we’d like to welcome Charlotte, Leo, Archer, Evelyn, Charlie, Jack, Indie and Emmy to the world), we then rent out the property for a nice healthy tax break, and rent a bigger house in a location we want to live in, but can’t necessarily afford right now.
And here’s the rub: Anyone with a fur child of any description knows the likelihood of finding a really good rental is severely curtailed when there is a four-legged woofing, pooping, stinky, hairy, licky creature into the equation.
Even one as cool as Holly.
*For the record: I have read and re-read the finance.wa.gov.au site on the subject of concessional stamp duty in the $500K-$600K bracket for first homeowners, and from what I can work out, the concessional stamp-duty on a property worth $599,999 would save you… $6.
It breaks down like this: The rate of duty is apparently $22.51 per $100 above the $500K cut-off for the first homebuyer. On my $599K property that this still applies to, the stamp duty would be $22,509.
For a non-first-homebuyer buying the same property, the finance.wa.gov.au calculator shows me the stamp duty would be $22,515.
So effectively you’re saving the value of a coffee and maybe a newspaper.
I’m not sure if this is right, so if anyone else has info on it, let me know!