The Turnbull government will let first home buyers save up to $30,000 in a super account and crack down on foreign investors as part of a widely-anticipated housing affordability package in the 2017 Budget.
First home buyers will get a tax cut on their first home deposit by being able to salary sacrifice into their super accounts.
Contributions will be taxed at 15 per cent and withdrawals taxed at their marginal rate, less 30 percentage points.
Under measures to help those save for a home faster, from July 1, 2017 first home buyers will be able to withdraw voluntary contributions from their superannuation.
Those concessional contributions will be taxed at marginal rates.
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They can contribute up to $15,000 per year and $30,000 in total and can start from July 1. They can start withdrawing those funds from July 1, 2018 onwards.
Older home owners will also be encouraged to downsize to free up larger homes for families.
Seniors will be encouraged to sell up their homes by being allowed to make a non-concessional contribution of up to $300,000 into their super accounts from the proceeds of the sale.
Foreign investor restrictions
There’s also major crackdowns on foreign investors of residential Australian homes under the Budget changes.
Tough new rules will mean they’ll only be allowed to buy up to 50 per cent of new housing developments.
That cap will be included as part of conditions of New Dwelling Exemption Certificates, which are granted to developers as pre-approvals for property sales.
The measure is designed to ensure that a minimum number of new homes are reserved for Australians to buy, the government says.
There’s also new charges on foreign owners of empty homes.
Residential property that’s not occupied or available for rent for at least six months per year will face an annual levy of $5000 at the same rate as the foreign investment application fee. This will apply to those who make a foreign investment application for homes from May 9.
It’s designed to boost the availability of rental properties to Australians.
Foreign and temporary tax residents will be denied access to capital gains tax exemptions. Existing homes held before May 9 will be grandfathered until June 30, 2019.
The CGT withholding rate will be raised from 10 per cent to 12.5 per cent from July 1, 2017.
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Other capital gains tax changes
For those who invest in affordable housing the government will also provide another 10 percentage point capital gains tax discount, raising it from 50 per cent to 60 per cent.
That discount will only apply for homes let out to lower-income tenants if rent is charged below the private rental market rate. The house must also be managed through a community housing provider and held for a minimum three years.
In addition, managed investment trusts will get a tax boost if they invest in affordable housing through concessional tax treatments, as long as homes are available for rent for at least a decade.
New housing stock
The government has also promised to release Commonwealth land for new housing developments, including Defence land in Maribyrnong in Melbourne.
A new $1 billion national housing infrastructure facility will help fund “micro” city deals to boost the creation of new home developments.
Treasurer Scott Morrison said there was no silver bullet to the housing affordability problem.
“But by adopting a comprehensive approach, by working together, by understanding the spectrum of housing needs, we can make a difference.”
