Helen Twose: House ownership via firm a grey area

Previous home owners may still be eligible for subsidies.

Allowing those who previously owned property through a company to withdraw funds may be outside intent of legislation.

I generally have a good understanding of KiwiSaver, in that withdrawing money has to be for your first home and your principal place of residence, etc.

However, our situation is my wife and I purchased a house as a rental investment a year ago and in doing so we created a company (we are the directors/shareholders).

Therefore, technically it wasn't purchased under our own names but instead under the company.

We both have KiwiSaver accounts and are now wondering whether we can withdraw some money for a first home under our own names, which we would intend to live in.

Good question.

The KiwiSaver rules do not expressly state that a member will be ineligible for a first home buyer withdrawal benefit where they have previously owned a property via a company.

However, it is likely to be considered outside the policy intent of the legislation and could potentially be challenged.

As a result it's difficult to provide a clear answer.

It's possible that different KiwiSaver providers may interpret the legislation differently.

We recommend that you discuss this directly with your KiwiSaver provider.

As a reminder: To access your member contributions and your employers' contributions to purchase your first home, you must:

1. Have been a KiwiSaver member for at least three years.

2. Not have made a withdrawal from any KiwiSaver scheme to buy a home.

3. Intend the property to be your principal place of residence.

4. Never have owned property before or be considered by Housing New Zealand to be in the same financial situation as a first home buyer.

There are some limited circumstances in which a member's interest in property can be disregarded for the purpose of meeting point four above including, for example, where the member holds an estate in land as a bare trustee or where the estate in land is a leasehold estate.

•Kate Armstrong, Westpac head of investments and insurance.

Before I apply to Housing New Zealand would you know if I will qualify for the "second chance" scheme?

My ex-partner and I bought a property in 2007, separated in 2010 and I haven't owned a property since then.

I would like to buy my own place in two years.

This link to our website should provide all the information you need around the deposit subsidy: http://www.hnzc.co.nz/rent-buy-or-own/buying-your-first-home-with-kiwisaver/buying-your-first-home-with-kiwisaver

The link provides the eligibility criteria - a combined gross annual income earned in the last 12 months of $100,000 or less (before tax) for one or two buyers, or a combined gross annual income earned in the last 12 months of $140,000 or less (before tax) for three or more buyers.

In answer to the specific question above, assuming you are a KiwiSaver member and have been a member for at least three years, as someone who has previously owned a home you would need to meet the income cap criteria and the realisable asset criteria of the deposit subsidy.

Realisable assets are belongings that you can sell to help buy a house.

For example, if you were buying a house in the $300,000 cap area your realisable assets cannot be worth more than $60,000.

Housing New Zealand must determine if your financial position is the same as a first home buyer's in terms of assets, income and liabilities.

For example:

Your income must not exceed the household income caps.

You need to be able to secure a mortgage from a commercial lender.

You must declare your assets, which must amount to no more than 20 per cent of the regional house price cap.

If you are not planning to buy a house for two years you should wait to apply in two years for the subsidy as we do not know if the criteria for the deposit subsidy may change again within this two-year period.

The only foolproof way we can determine your eligibility is for you to make an application when you are ready to buy a home.

•Mike Adamson, National Manager Financial Products, Housing New Zealand.

Correction:

Last week a response to a reader question incorrectly said someone who already owned a home could be eligible to access their KiwiSaver savings to purchase a home. This should have read that those who previously owned a home may be eligible. Any current owner of a home or land is not eligible.

•Disclaimer: Information provided is stated accurately to the best of the respondent's knowledge at the time of publication. It is general in nature and should not be construed, or relied on, as a recommendation to invest in a particular financial product or class of financial product. Readers should seek independent financial advice specific to their situation before making an investment decision.

To have your KiwiSaver questions answered by the NZ Herald's panel of industry players email Helen Twose, helentwose@gmail.com.