2017 Federal Budget & Housing Affordability
The Federal Budget that was handed down aimed to address the housing crisis that has been an issue for quite a while now. We’ve summarized the housing measures and how they may impact you.
First-Time Home Buyers
The Budget has introduced the First Home Super Saver Scheme which was developed to help first-time home buyers save for a house deposit. Under the new scheme effective 1 July 2017, individuals can salary sacrifice contributions to superannuation which can be withdrawn from 1 July 2018 onwards to fund their first home deposit.
They can contribute up to $15,000 per year and $30,000 in total and contributions will be taxed 15% while withdrawals will be taxed at marginal tax rates less a 30% offset.
Older Property Owners
Older Australians who are aged over 65 are being encouraged to sell their family homes and make a non-concessional contribution of up to $300,000 each into their superannuation from the proceeds of the sale.
The aim is to free up larger homes which are owned by seniors who because of their age may find that downsizing would be a more suitable housing arrangement. Through this scheme, larger homes would be made available for younger, growing families.
Restrictions will be imposed on foreign investors of Australian residential homes. Foreign ownership of new developments will be capped at 50% as a part of conditions of New Dwelling Exemption Certificates.
Beginning 1 July 2017, the withholding rate on capital gains tax that foreign investors must pay will increase from 10% to 12.5%.
Foreign investors will also have to pay capital gains tax on their principal residence once sold. Additionally, a “Ghost tax” of up to $5,000 will be imposed on foreigners whose property is left unoccupied or made unavailable to the rental market for at least six months per year.
Treasurer Scott Morrison said, “We will work with the States and Territories and local Governments to get more homes built, because prices are higher where demand is greater than supply.”
The National Affordable Housing Agreement will be replaced with a new set of agreements but with the same funding. The National Housing Finance and Investment Corporation (NHFIC) has been established to help with long-term, low-cost finance of affordable rental housing.
For those investing in affordable housing, the Government will raise the capital gains tax discount from 50% to 60%. This discount applies to homes that are rented out to lower-income tenants paying below the private rental market rate. Additionally, a community housing provider should manage the house for a minimum of three years.