Super plan to help buy your first home
According to the Australian Bureau of Statistics, the proportion of residential real estate being bought by new buyers is now only around thirteen percent of the total, and is on a downward slide. It is investors and people changing homes that now dominate residential real estate transactions and the demand for residential real estate is not coming from the young people trying to enter owner occupation.
First home buyers will now be allowed to use up to $30,000 voluntary superannuation contributions to place a deposit on a house. They will also be allowed to withdraw any contributions beyond the 9.5 per cent super guarantee to buy property.
From 1 July 2017 savers will be able to make voluntary contributions of up to $15,000 a year and up to $30,000 in total to their superannuation funds, which can be withdrawn from 1 July 2018, plus the associated earnings, for a first home deposit. This will enable savers to pump extra money into their super at an attractive tax rate which will then help them to build a deposit more quickly than is currently possible.
The super guarantee contributions cannot be used for housing purposes but couples who have not purchased a home before (together or individual) will be able to access the scheme and combine their savings to make a single deposit. Further, there will be no need for members to tell their super fund what the additional contributions will be used for.
Something to consider is that first home buyers will also need to factor in employer contributions to ensure that they do not breach the $25,000 cap, otherwise they may be hit with a penalty tax.
So who should open a First Home Super Saver?
Anyone who is planning on buying a home in the next few years and even if you have or do not have a decent deposit saved, then this scheme is for you.
Beware though, under the current rules, the money you have saved can only be used as a deposit for your first home so if your partner has already bought a home, you will be unable to use that money in your super for a deposit.
Another scheme to remember is that if you buy a brand new home, whether that be off-the-plan or an individual build from a block of land, and you are eligible for the first home buyer’s grant from the government, you may also be entitled to receive a contribution from the government of up to $15,000. There are specifics around this grant so be sure to do your research before you commit.
Buying and selling property can be one of the most stressful life events, especially for first home buyers. Make sure you get in touch with us here at Carroll Fairon Solicitors who can assist you with your property and conveyancing needs. Whether it be purchasing already built residential property or an off-the-plan property, we always recommend you seek legal advice before you sign the contract. Reach out, we’d be happy to discuss any questions you might have.
Happy saving and happy buying!