Who wants to own their very first home?
Buying your very first home is the Great Australian Dream. It can be a very exciting process, but for some, especially first home buyers and lower income households, it's getting much harder for this dream to become a reality.
Did anyone take note of the 2017/18 federal budget overview?
Well here is what's relevant to you!
First Home Super Saver Scheme – 2017-18 Financial Budget
In the 2017/18 financial year budget, the Federal Government have imposed that first home buyers will be able to save for a deposit through superannuation:
- As of the 1st of July 2017 you can make voluntary super contributions of up to $15,000 per year (or $30,000 in total), to help you save for that deposit on your dream home.
- Voluntary super contributions can be deductible or non-deductible in your individual tax return. Deductible contributions reduce your individual taxable income, and will be taxed at 15% in the super fund when they are deposited. All future earnings within super on the amounts deposited are also taxed at 15%. This gives the potential to save you up to $5000 in income tax, depending on your circumstances.
- After the 1st of July 2018, these contributions can be withdrawn for a first home deposit only. Deductible contributions and earnings that are withdrawn will be taxed individually at the marginal rate less 30% offset.
The first home super saver scheme can potentially boost savings to put towards a deposit by at least 30%, as opposed to a standard deposit account. This is due to the concessional tax treatment and higher rate of earnings realised within superannuation.
This may be a huge benefit for home buyers, particularly in regional areas where $30,000 is seen to be a sufficient amount for deposit on a new home. This incentive provides first home buyers the chance to build their savings more quickly and purchase a home that they are happy with. The $30,000 contribution limit is per person, so couples will be able to both access the scheme and combine their savings for a single deposit.
The ATO has assumed the responsibility of administering the First Home Super Saver Scheme. They therefore are responsible for determining the eligibility of the person seeking a release of funds, and to approve the released amounts based on the information provided by the applicant and superannuation fund.
The ATO will also administer compliance mechanisms to ensure that people purchase their first home after they release monies from the superannuation fund. This means the amount withdrawn is not allowed for personal use, it is designed entirely for a home loan deposit.
If you are interested to know more about this topic or how it may affect you, you can call or book an appointment on (03) 5032 9422.