Victorian first-home buyers forced to repay millions in grants and tax

The Allan government is clawing back increasingly large sums from first-home buyers illegally using the state’s support schemes for market entrants.

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Victorian first-home buyers are being forced to pay back millions of dollars a year after being caught breaking the rules for state government programs intended to help them.

In the past decade there have been more than 5244 Victorians who have claimed duty reductions on home purchases illegally, with the state going on to claw back a hefty $48,673,829 in tax, fines and interest.

And the number getting caught breaking the rules around the state’s stamp duty concession scheme appears to be on the rise, with more than 800 of the Victorians assessed as owing the state a combined $12.16m in unpaid tax, fines and interest, caught in the 2025 financial year.

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In 2016, before first-home buyers were able to get a discount or avoid stamp duty, there were just 239 people who broke rules around their concessions with a combined $1.585m repaid to treasury coffers.

Pensioners and concession cardholders are also able to access stamp duty concessions for homes purchased up to $750,000, a key support program for first-home buyers.

There have also been a number of duty reduction schemes for off-the-plan purchases in the past decade.

But it is clear those seeking first-home buyer benefits are behind a significant portion of those breaking the rules.

Stamp Duty Breaches By Financial Year

Source: State Revenue Office of Victoria

Separate figures show in the past financial year 235 claimed the $10,000 First Home Owner Grant available to those making their start on the ladder with a newly built home in the latest data.

They had to pay the government a combined $2,996,500 in repaid grants, fines and interest.

Over the past decade, there were 1966 who claimed the grant erroneously, with repayments to the government topping $24.74m.

Combined with the stamp duty claw back, it equates to more than $73m in 10 years.

Property experts have warned that for some who try to trick the system, repaying the cost and subsequent impacts to their homeloan could force them to sell.

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Breaches of the rules for first-home buyers include failing to live in the home as their principal place of residence, not doing so for the full 12 months required, as well as failing to disclose that it was an investment and would be leased out, or that they had a partner purchasing with them.

Others were caught out in a scenario where a partner who purchased the property with them had already received a grant or had a prior interest in a home, and some even tried to hide the fact by not disclosing prior names, such as a previous married name.

First Home Owner Grant Breaches By Financial Year

Source: State Revenue Office of Victoria

Breaches were detected with a mix of the public sharing information, data matching, voluntary disclosure and other sources.

A Victorian government spokesperson said stamp duty was important for funding work on roads, schools and hospitals.

Prominent Melbourne buyers’ agent Cate Bakos said she felt the figures might be low as they only reflected those who had been caught.

“I know from my experience that some want to get creative and talk about how they can rort the system,” Ms Bakos said.

“I would be warning someone at least monthly who is looking to get a rort.”

The buyer’s agent added that depending on the buyers’ finances, there was a decent chance being caught in a breach could force them to sell their home as it could have ramifications to their loan as well as the need to pay out the tax burden or repay a grant.

Buyers’ agent Cate Bakos encounters a prospective buyer looking for ways to rort the system monthly.

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However, Ms Bakos said for those who had lived with a romantic partner who used the scheme for a concession but did not share ownership of the home, and whose name never appeared on the title, the rules did seem a bit harsh.

It could also lead to some people looking to launch legal action to claim a part of a home from a defacto relationship where they otherwise might not have, she added.

Ms Bakos said while it would be good to see that part of the rules addressed, it was also important that they review the current $750,000 cap of the stamp duty concession program as it was no longer suitable.

While offences represent less than 1 per cent of those using the First Home Owner Grant and stamp duty discount offered in Victoria, PropTrack economist Anne Flaherty said the numbers were “incredibly high”.

Realestate.com.au economist Anne Flaherty says rising desperation could also explain the increase in the numbers.

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“I don’t know if that’s a symptom of a lack of clarity around what the rules are, or people being more financially pressed and looking for ways to get ahead,” Ms Flaherty said.

The economist noted that with interest rates rising in recent years, there might be more people with no choice but to try and find a way around the rules to save their home dream.

“It could come down to people being more financially desperate,” she said.

“There could be people moving home with parents to help pay the loan via renting it out.

“And maybe they felt there was a low chance of the government finding out if they did it sooner.”

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