First home buyers can get government assistance.

One of TaxBanter’s trainers recalls April 2000. It was just a few months before she turned 20. That is when she and her sister, who was then 18 at the time, bought their first home in Sydney. The $165,000 price tag was not flashy. However, even a $ 1 million offer in today’s market will not guarantee a buyer a better property in Sydney.

Their parents’ financial support and encouragement enabled the sisters to buy a home early. They didn’t realize they were eligible for a $7,000 government grant to First Home Owners. This grant was introduced on July 1, 2000, to offset the GST effect on home ownership. It would have contributed significantly to the purchase price.

Now fast forward 20+ years. In the 2020s, a few weeks or even a few months can make the difference between buying a property for $1 million or $1.2million. House prices have increased at an exponential rate in recent years. It is very rare to find two teenage buyers buying a house. The median age of first-time homebuyers in 2020 was 36. To save 20% for the first home in Australia it takes 11.4 years (4.1 years in Sydney). The housing affordability crisis in Australia has been extensively discussed. Data from the Demographia International Housing Affordability Survey showed that five Australian capital cities topped the list of least affordable housing markets in the September 2021 quarter.

Many analysts believe that the property markets in Australia are improving after a 22.1% rise in house values in 2021. However, dwelling values in Sydney, Melbourne and Brisbane saw modest increases of 0.3% and 0.1% in the March 2020 quarter (2.4 percent nationally). Despite rising house prices, buyers signed the dotted lines in fear. However, there has been a slowdown in this market due to a concern about overpaying and the possibility of higher mortgage interest rates.

Many Australians still dream of owning a home. It is worth considering all possible options to make that dream come true.

First Mortgage Deposit Scheme – A Federal Government initiative to help first-time homebuyers get their first home sooner.

The National Housing and Finance Investment Corporation guarantees a portion of a first-time home buyer’s eligible home loan from a participating lender. This allows the individual to buy their first home sooner and with as little as a 5% deposit. First home buyers with less than a 20% deposit usually need to pay mortgage insurance.

The guarantee of up to 15% of the deposit may allow the buyer to get finance approval without the need to pay mortgage insurance.

The Government stated in the 2022-23 Federal Budget that it would increase the scope and number of applicants to the scheme. These changes were not made before the Federal election.

First Home Super Saver Scheme — Another Federal Government program allows first-home buyers to save money by voluntarily contributing to their superannuation accounts. These voluntary contributions enjoy a concessional tax treatment (i.e., It is an easy way to save more money for your first home deposit.

The number of eligible contributions that count towards an individual’s releasable amounts will rise from $30,000 to $50,000.

Home buyer grants and stamp duties concessions are available from the Territory and State governments. These are primarily for first-time homebuyers. You can find information on available schemes and eligibility criteria at the appropriate State or Territory government website. The Government and Opposition announced new housing affordability strategies as part of their federal election platforms.

• Government — First home buyers can use a portion of their superannuation savings (lower than 40 percent or $50,000) to buy their first home.
• Opposition — Equity Contribution from the Federal Government up to 40% of the purchase of a new house or up to 30% of the purchase of an existing home (may repayable).

More information and training

As we look at the tax landscape, join us at the beginning of each month. To keep up with your CPD needs, our Monthly Tax Updates or Public Sessions offer cost-effective and excellent options.

The Special Topic, Superannuation – Catching up. Will discuss the First Home Super Saver Scheme changes and other upcoming superannuation changes that employers and individuals can expect. This session can be attended online or at one of our nationally-presented Public Sessions. This information will also be covered in our upcoming Superannuation Online sessions.