While the 2017 Federal Budget may seem boring, it contains an exciting benefit for first home buyers.
The First Home Super Saver Scheme will allow people to make additional contributions to their super and then withdraw a maximum of $30,000 for a deposit on their new property. The move is one of several steps the government has made in an attempt to help young people enter the property market.
The new scheme will allow first home buyers to withdraw amounts that have been contributed voluntarily over the 9.5% super guarantee. The threshold on voluntary contributions is $15,000 per year or $30,000 in total. The contributions will be taxed at a lower tax rate of 15% and will allow these people to withdraw not only those contributions, but also any earnings generated from those contributions at a rate 30% lower than the person’s marginal tax rate.
Many people have condemned the scheme, with worries about the repercussions of withdrawing from your retirement income, as well as the fact that super (which is heavily invested in growth assets, such as equities) can fall sharply in value. The scheme however, will not be available to everyone, rather it will be accessible by a relatively small band of first home buyers who have the luxury of being in a position to make voluntary super contributions through salary sacrifice arrangements.
In addition to the First Home Super Saver Scheme, the government has implemented other initiatives to help young people with their progress into the housing market. The budget introduced measures that allow people aged 65 or over to contribute up to $300,000 from the sale of their home directly into their super. This was implemented with the intention to free up housing in desirable areas by encouraging ageing residents to downsize.
Provisions have also been made in the budget to help reduce the pressure on the rental market. Foreign investors who have not made their properties available for rent for at least 6 months out of the year will face fines of $5,000 per property per year. This should hopefully increase the amount of properties available for renters.
Whether you choose to withdraw from your superannuation or not, the 2017 Federal Budget is a step in the right direction to help first home buyers and renters across Australia. More information on the 2017 Budget can be found at the links below.
Image via finder.com.au
Kidman. A, May 10, 2017, Budget 2017: How will it help first home buyers?, https://www.finder.com.au/budget-2017-housing-affordability
Kirby. J, May 10, 2017, Budget 2017: changes to super rules kept to a minimum, http://www.theaustralian.com.au/budget-2017/budget-2017-changes-to-super-rules-kept-to-a-minimum/news-story/5856fdd99f5ffbfe80d3148fbad6912e
Patten. S, May 9, 2017, Budget 2017: First-home buyers can tap up to $30,000 of super savings, http://www.afr.com/personal-finance/superannuation-and-smsfs/budget-2017-firsthome-buyers-can-tap-up-to-30000-of-super-savings-20170507-gvzr7w
Power. T, May 10, 2017, 2017 Federal Budget summary: Superannuation and retirement measures, https://www.superguide.com.au/retirement-planning/2017-federal-budget-superannuation-retirement