Are first-home buyers in luck? Budget shows hope for securing the Australian Dream

With the 2018 Federal Budget being released tonight, we thought it pertinent to take a step back and look at one of the proposals that is finally being implemented from last year’s budget – The  First Home Super Save Scheme implemented on 1 July 2017 under the First Home Super Saver Tax Act 2017 (Cth).

This scheme is aimed at addressing housing affordability and allows first home buyers to make a maximum of $15,000.00 per year, voluntary salary sacrifice contribution into their superannuation fund.

From 1 July 2018, first home buyers will be allowed to withdraw from their superannuation at a maximum of $30,000 from contributions across all years. This amount will also include any associated earnings that you may have made on that contribution.

How does salary sacrificing work?

Salary sacrificing works by voluntarily depositing a portion of your earnings into super before it is taxed at the marginal rate. The benefit here is that you are taxed at 15 cents on the dollar, opposed to the minimum 19 cents on the dollar when you earn above $18,200. 

The Honourable Scott Morrison MP, Treasurer of the Commonwealth of Australia explained the scheme as follows in his 2017 Federal Budget speech: “First home buyers will be able to save for a deposit by salary sacrificing into their superannuation account over and above their compulsory superannuation contribution…”

Who is eligible?

  • Persons over 18 years old;
  • Persons who have never owned property in Australia; and
  • Persons who have not benefited from the first home super saver scheme before.

What can it do for me?

Contributing into superannuation is designed to help you make savings on tax and take advantage of earnings on super contributions. Many superannuation funds invest your super into different shares, cash deposits, bonds and even property funds to maximise your investment. While using superannuation might not be for everyone, it is a great way to fast track first home buyers entry into the property market. Ideally, these savings can be put towards a deposit for a home loan, helping you enter the property market sooner than if you were depositing after tax savings into a bank account.

Making a decision to buy a property is not easy, and neither is deciding whether to use a scheme like this. Like any financial decision it is always advised that you seek out financial advice and learn about the impacts salary sacrificing will have on your taxable income.

How can we help?

McDonald Johnson Lawyers supports many first home buyers with legal advice and conveyance work, from simple residential purchases to more complex transactions – through corporations and trust funds including Self-Managed Superfunds. Our team can work directly with your accountant and financial planner to bring you the best advice to help you get started in property. Our hope is that home buyers can take advantage of this great scheme, and find themselves one step closer to entering the property market and securing the Australian Dream.

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