Budget 2017 Super plan for 1st home buyers deposit
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Budget 2017 New super plan to help first home buyers save for a deposit
FIRST home buyers will be able to save for a home deposit faster by salary sacrificing into their super fund from July 1.
On top of existing compulsory super contribution, individuals saving to buy will be able to put a total of $30,000 into their super, or $15,000 maximum per year.
Couples can put in a total of $60,000.
Another measure that could free up more family homes is enabling downsizers over the age of 65 to make a non-concessional contribution of up to $300,000 into their super fund from the process of the sale of the family home.
Some forecasts have suggested about 50,000 more family homes could come onto the market, helping to ease prices.
And despite predictions, the Government is making some minor changes to negative gearing.
Owners of holiday homes or other investment properties won’t be able to claim tax deductions to visit them.
And in a measure that will save a quarter of a billion dollars over the next four years, plant and equipment depreciation deductions — on items that can be easily removed such as carpets and dishwashers — will only be allowed by those investors who incurred the expense.
The Budget also announced a foreign investment levy of “at least” $5000 on future foreign investors who leave their property vacant for more than six months.
This is likely to be considered little obstacle to foreign investment by critics.
Of the first homebuyer savings plan, which will cost $250-million over the next four years, Treasurer Scott Morrison described it as far superior to that introduced by former Labor PM Kevin Rudd — axed by Tony Abbott in the 2014 Budget.
He said the Rudd plan was “a complete flop because it was too hard, it wasn’t simple”.
“It was very confusing.
“This one you just tick a form to say that in addition to your compulsory super deposit, you want 5, 2 or 3 per cent of your wage to go into this account.”
Mr Morrison said most first home buyers would be able to accelerate their savings by at least 30 per cent.
However, in Sydney, house prices have jumped 70 per cent in five years, whereas incomes have risen only 13 per cent.
Core Logic puts the median dwelling price at $860,000 in Sydney, up 16 per cent in a year. In Melbourne it’s $650,000, up 15.3 per cent.
Mr Morrison said there were no “silver bullets to make housing more affordable”.
REA economist Nerida Conisbee said the savings plan will be of some benefit.
“One of the biggest obstacles for first home buyers is getting the deposit together,” she said.
It’s just one part of a wideranging housing affordability package that also boosts supply in Western Sydney and Maribyrnong in Melbourne.
The benefit to first home buyers comes from the low tax rules that apply when people salary sacrifice, with contributions and earnings taxed at 15 per cent rather than marginal rates.
Treasury officials confirmed that when it comes time to withdraw from the fund to buy a home, they won’t be able to tap into the money they have put aside for their retirement; only their contributions and earnings.
The Grattan Institute’s John Daley had warned against reintroducing that scheme, saying it would be either ineffective due to being too small, or too large and counter-productive.
To help boost supply a $1 billion National Housing Infrastructure Facility, based on a UK model, will be set up to cut through red tape for housing developments.
The Maribyrnong, Melbourne, surplus defence land will be released for 6000 new homes.
And the Turnbull Government will also deliver “tens of thousands” of new homes in western Sydney.
Other measures to address supply include allowing managed investment trusts to be used to develop and own affordable housing. This will provide investors in affordable housing with greater income certainty by enabling direct deduction of welfare payments from tenants.
It will also increase the capital gains tax discount to 60 per cent for investments in affordable housing.
Mr Morrison conceded that some older people who do downsized could jeopardise their pension.
“It will depend on the size of the asset,” he said.
Mr Morrison also restored the requirement that prevents developers from selling more than 50 per cent of new developments to foreign investors.
Labor has pledged to restrict negative gearing to buyers of new property.
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