What the federal budget means for First Home Buyers
The wait is over for first home owners hoping to catch a break with housing affordability.
On Tuesday night as part of the 2017 Federal Budget, it was announced that first homeowners would be given a helping hand with saving their deposit.
The First Home Super Saver Scheme
The First Home Super Saver Scheme allows entry-level buyers to save more of their pre-tax dollars by making voluntary contributions to their super fund.
They would then be allowed to withdraw the money, which will be taxed at a lower rate, and put it towards the purchase of a home.
According to documents released on Tuesday, the Budget indicates that it will “enable first home buyers to build savings more quickly for a deposit.”
The scheme is estimated to raise $250 million in revenue from 2017-18 to 2020-21.
First-timers won’t be able to dip into superannuation, as was suggested earlier this year.
How much can you contribute?
There is a limit to how much you can contribute: up to $15,000 a year and $30,000 in total.
Couples are both eligible for the scheme and can withdraw up to $60,000. As the median house price in Sydney is currently $1.15 million, this would cover the cost of stamp duty.
Contributions can be made from July 2017 and withdrawals allowed from July 2018.
Changes to foreign investing could help first home owners
While first home owners are only just considered winners in this year’s Budget, foreign investors have been hit with more fees.
The ABC reports this “could take a little heat out of property prices in the east coast capitals, which would benefit first home buyers.”
- Foreign investors being charged extra for properties left vacant.
- Foreign property owners will now have to pay the capital gains tax when they sell.
- Foreign ownership of new developments will be capped at 50 per cent.
Other changes that could help first home owners
Retirees who want to downsize will also no longer be penalised for putting more money into their super to encourage them to move into smaller homes. The limit will be $300,000.
But that’s regardless of if they have already hit the $1.6 million contribution limit taxed at a lower rate.
And in a tightening on negative gearing that could blunt Labor’s housing rhetoric, the government will save $700 million over four years by barring property investors from claiming travel expenses and limiting how much can be claimed on fixtures such as dishwashers.
That clampdown will mean investors travelling to inspect or maintain their rental property cannot claim those costs against their mortgage. The cost of real estate agents will still be deductible.
Capital gains tax breaks will also be tightened for people who live overseas but own property in Australia, denying them the exemption through the definition of “main residence”. Foreign owners who leave properties vacant will be hit with a $5000 fine.
It only applies to purchases from Tuesday, meaning it will only raise $16.3 million in four years.
Mr Morrison will also restrict foreign owners in new housing developments to no more than 50 per cent.
“There is no silver bullet to make housing more affordable,” the Treasurer said last night in his Budget speech.
Now that first home buyers know where they stand, you probably have a tonne of questions about buying your first home. We run some of Australia’s longest-running seminars for first home buyers. Come along!
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