By Milan Tojcic
“Smallest step in the right direction will end up being the biggest. Well, we’ll tip toe with you in the process until you start walking.” (Expert Mortgage Brokers)
This is where I’d like to put a picture of something, like houses or something. First home buyers or just a basic picture of houses in an unknown street. Or just a couple purchasing a house.
The federal budget 2017-18, again like budget 2016-17, shows no immediate fixes for the process of quick-fix housing affordability. However, with short term changes to budget, the First Home Super Saver Scheme, the long-term results may be different.
The issue with the first home buyers getting into the market “these days” has become evident with such high housing prices. Increasing degree of difficulty to save for a deposit resulting with Aussies entering the housing market much later than their parents and grandparents.
Generally, as the federal budgets change over time, in attempt to ease the entry into the market for first home buyers, most recent budget hasn’t made an immediate fix for the group. However, Since the last year’s financial budget that hasn’t changed much in favour of the first home buyers, budget 2017-18 has made a slightly bigger improvement.
So, what are the alternatives for the first home buyers by the new budget?
From 1 July 2017, Australian first home buyers may be able to salary sacrifice up to $15,000 per year and a lifetime limit total of $30,000 into their super. Once they are ready to use their savings as a deposit to purchase a property, at least a year later, that is in 1 July 2018, they can withdraw the funds from their super and use them to purchase their first home.
For couples who are trying save their first home purchase, this is ideal because they may both be able to take advantage of this scheme and contribute up to $60,000 into their super. Although the couple may not have an immediate fix to the matter, they may have a good chunk they can use to contribute their purchase of the first property with a higher deposit.
As good as it sounds, the scheme will not escape the “super tax department”. Salary sacrificed savings will be something that will be taxed by the “super tax department”, so to speak. However, the saving will be greater than in a deposit account as the amount salary sacrificed will be exposed to “concessional tax rates”. Hence a better way to save for a first home purchase than keeping the deposit in a savings account.
What does this mean for businesses wanting to purchase their first home?
Businesses are also able to benefit by allowing them to claim a tax deduction on personal contributions they can make and that way benefit as well. Alternatively using their pre-tax income as a benefit to contribute to a higher deposit for their first home purchase.
Want to find out some more information about the first home buyer super options and talk about the current market climate trends. Contact a professional financial adviser, or speak with an Expert Mortgage Broker.
Therefore, biggest decisions in life should be done right, choose nothing but the experts on your side.