The Defence Home Ownership Assistance Scheme (DHOAS) helps eligible current and former Australian Defence Force (ADF) members purchase a home by providing a subsidy towards interest on an eligible home loan. However, the scheme is designed for home ownership rather than property investment. Understanding how DHOAS works for property investment is therefore important before considering an investment strategy.
Can DHOAS Fund an Investment Property?
No. A DHOAS home loan cannot be used to purchase an investment property. The scheme specifically restricts the use of its loans to purchasing a home to live in, buying land and constructing a home, renovating or extending a home, or refinancing a loan originally used for these purposes.
This means an ADF member cannot obtain a DHOAS loan and use the funds to purchase a separate rental property. Similarly, additional funds cannot be borrowed through a DHOAS loan and redirected towards another property investment.
What Happens If Your DHOAS Home Becomes an Investment?
There is an important distinction between buying an investment property with DHOAS and later turning a DHOAS-funded home into a rental.
Generally, members must occupy the subsidised property for 12 months from the date their first subsidy payment begins. After completing this requirement, they can move elsewhere and rent out the DHOAS-funded property while continuing to receive the subsidy, provided the DHOAS home loan remains current.
This can create a pathway where a former owner-occupied home eventually becomes a rental property, although members should consider the tax consequences and seek independent tax advice.
Can You Own Another Investment Property?
Owning a separate investment property is different from using DHOAS to finance it. The DHOAS rules focus on how the subsidised loan and property are used.
Members considering purchasing another property should therefore keep the investment loan separate from their DHOAS financing and carefully check their continuing eligibility. Particular restrictions also apply to the DHOAS lump-sum option. For example, purchasing an investment property while serving in the ADF can affect eligibility for the lump sum.
Planning Your Property Strategy
ADF members considering property investment should assess borrowing capacity, deposit requirements, rental income, taxation, ongoing expenses and the potential impact of postings or relocation.
Property investment platforms and research services can also help investors compare locations and understand different approaches to building a property portfolio. The key is to distinguish investment decisions from the specific requirements attached to DHOAS assistance.
AssetBase and Property Research
AssetBase can be considered alongside other property research resources when examining investment opportunities. Rather than treating DHOAS as an investment loan, investors can use separate financing and evaluate properties according to factors such as location, rental demand, affordability and long-term potential. Independent financial and tax advice remains important before committing to an investment.
Conclusion
DHOAS can be valuable for helping eligible ADF members purchase a home, but it is not intended to finance investment properties directly. Once the required occupancy period has been satisfied, the subsidised property may potentially be rented out while the subsidy continues, subject to the scheme’s conditions. Understanding how DHOAS works for property investment helps ADF members separate their home ownership benefits from their broader investment strategy.