The Federal Treasurer announced the following measures in the Budget that are specifically designed to assist those who are seeking to enter the property market.
First Home Super Savers Scheme
A new First Home Super Savers Scheme will allow home buyers to save for a deposit by salary sacrificing into their super account, over and above their compulsory super contribution. The scheme will attract the same tax advantages as superannuation. That is, contributions and earnings will be taxed at 15% instead of marginal tax rates. Withdrawals will be taxed at the marginal tax rate, less 30%.
Your existing super account can be used and you can decide how much you wish to salary sacrifice for your first home deposit. Contributions will be limited to $30,000 a person in total and $15,000 per year.
If you are a couple, both members can save within the cap and then combine savings for a single deposit.
Contributions can be made from 1 July 2017, and withdrawals will be allowed from 1 July 2018.
Whilst the new scheme is very similar to an earlier scheme that was introduced by the Rudd Government, a key change to the new scheme is that there is no time limit on how long the savings need to be held in the account prior to be released after 1 July 2018. Also, there is no longer the requirement for a separate savings account to be established.
The Federal government will release certain land that is currently owned by them. At this stage, there is very limited detail on exactly what land will be released in Sydney. Unlike Melbourne, Sydney does not appear to have land located close to the city that could be released by the Federal Government for housing purposes.
Prohibiting property developers from selling more than 50% of new developments to foreigners.
This will allow more Australians to buy brand new property and set limitations on developers who previously marketed their developments to overseas buyers.
For those aged 65 and over, the Government will allow you to make a non-concessional contribution of up to $300,000 from the proceeds of selling your home from 1 July 2018.
These contributions will be in addition to those already permitted under existing rules and caps, and will be exempt from the existing age test, work test and the $1.6m balance test for making non-concessional contributions.
The measure will apply to sales of a principal residence owned for the past 10 or more years, and both members of a couple will be able to take advantage of this measure for the same home.
It is designed to encourage downsizing by older Australians, freeing up the stock of large homes for younger, growing families.
Clearly, the Federal Government has its hands tied on the issue of housing affordability and first home buyers. Approving land for housing and developments falls under State and Local Government jurisdiction. Similarly, the significant cost of stamp duty payable when purchasing property forms part of the State Government revenue.
We look forward to the upcoming NSW State Budget next month for expected announcements on housing affordability.