Form 5405 Explained: 2025 Updates for First Home Buyers in Australia

First home buyers in Australia are facing a dynamic property landscape in 2025, with updated government incentives, changing market conditions, and more paperwork than ever. If you’re hoping to secure the First Home Owner Grant (FHOG), Form 5405 is a critical part of the process. Here’s what every Australian buyer needs to know about this essential document and how it can impact your path to homeownership.

What is Form 5405 and Who Needs It?

Form 5405 is the official document required by the Australian Taxation Office (ATO) for individuals looking to claim the First Home Owner Grant or related benefits. It serves as both a declaration and application, ensuring that buyers meet all eligibility criteria set by state and federal governments. While each state has its own specific grant application forms, Form 5405 is widely recognised for federal support or additional tax offsets linked to first home purchases.

• Purpose: To confirm your eligibility for the FHOG and any associated stamp duty concessions or federal tax offsets.

• Who must submit: First-time buyers purchasing or building a new home, or in some cases, substantially renovating an existing property.

• Where it fits: Often submitted alongside state-based grant forms and lender documentation during settlement.

Key Changes and Policy Updates for 2025

2025 has brought several updates impacting the use and processing of Form 5405. The most significant policy shifts include:

• Increased property price caps: Most states have lifted FHOG eligibility thresholds in response to rising property prices. For example, NSW now allows grants for homes valued up to $900,000 in metropolitan areas.

• Digital lodgement: The ATO and several state revenue offices now require Form 5405 and related documents to be lodged digitally through approved platforms, streamlining processing times.

• Enhanced compliance checks: Data matching between the ATO, lenders, and state offices has become more sophisticated. Applicants should expect thorough reviews of residency, income, and prior property ownership status.

• Federal bonus offset: In 2025, the Commonwealth introduced a one-off tax offset for eligible first home buyers using the FHOG, automatically triggered when Form 5405 is accepted.

As an example, Jane and Sam, a couple in Victoria, purchased a new build for $670,000. By submitting Form 5405 online, they received the $10,000 FHOG, a $5,000 stamp duty concession, and, for the first time in 2025, a $1,200 federal tax offset applied directly to their annual return.

Completing and Lodging Form 5405: Practical Tips

Getting Form 5405 right is essential to avoid delays or even rejection of your FHOG claim. Here’s how to ensure a smooth process:

• Double-check eligibility: Confirm you or your spouse have never owned property in Australia, and that you intend to live in the home for at least 12 months after settlement.

• Gather supporting documents: You’ll need proof of identity, contract of sale, building contract (if applicable), and evidence of funds.

• Lodge early: Submit Form 5405 as soon as your contract is unconditional. Digital lodgement can often be done via your lender or state revenue portal.

• Track your application: Use the online tracking tools provided by most revenue offices and the ATO for real-time updates.

• Be ready for follow-up: Enhanced compliance means you may be asked for additional documents, especially if you’re self-employed or have complex financials.

Common mistakes include using outdated forms, omitting required signatures, or misunderstanding the residency requirement. In 2025, with tighter digital integration, incomplete forms are quickly flagged and can delay your settlement or grant payment.

Form 5405 Beyond the Grant: Tax and Financial Planning

While Form 5405 is primarily associated with the FHOG, its reach extends to broader financial planning:

• Tax offsets: New in 2025, successful Form 5405 applicants may automatically receive federal offsets, which can reduce your tax payable for the year of purchase.

• Record-keeping: Keep a copy of your submitted form and grant confirmation for future reference—especially if you plan to upgrade, refinance, or invest down the track.

• Long-term impact: Receiving the FHOG can improve your borrowing power and cash flow, making it easier to manage repayments or save for future property goals.

For example, buyers in Queensland who received the grant in previous years have found that proper documentation with Form 5405 helped streamline their eligibility for subsequent schemes, such as the First Home Super Saver Scheme or the Regional Home Guarantee.