Key Takeaways From The Latest Federal Budget
The latest federal government Budget for 2021-22 revealed some incentives and a helping hand for certain buyers and sellers.
Aimed at stimulating the property market to further Australia’s economic recovery from the pandemic, the 2021-22 Budget announced new or extended schemes for three different groups: downsizers, single parents and first home buyers.
And this is good news for buyers and sellers in our area.
Downsizers get an incentive to sell the family home
Downsizing can bring emotional and financial challenges and some prospective downsizers can find it too overwhelming, so simply stay put.
The government has stepped in to make it slightly easier, and give sellers of retirement age an incentive to move on, by expanding the existing “downsizer contribution”. This scheme allows each person to make a post-tax contribution of up to $300,000 per person to their superannuation when they sell the family home. So a couple can contribute up to $600,000. The minimum age has been lowered to 60 years, allowing many more people access to this scheme at a younger age.
First Home Buyers were given more access to assistance
In a rising property market, affordability is an issue for first home buyers. For example, to buy a home in Middle Ridge, where the median house price is $620,000, buyers would need to save a 20% deposit of $124,000. A unit is $405,000, requiring a 20% deposit of $81,000.
As you can see, one of the biggest challenges first home buyers face is saving for the deposit (and other upfront costs), and this is where the latest Budget offers a helping hand.
The government will expand two federal assistance schemes aimed at first home buyers:
- The First Home Loan Deposit Scheme (FHLDS) allows eligible first home buyers to buy a property with just a 5% deposit. The Commonwealth government will guarantee up to 15% of their home loan, removing the need for these buyers to pay lenders mortgage insurance (LMI) and helping buyers get into the property market sooner. Under the budget, 10,000 more places will be available. To be eligible, First Homebuyers need to earn under the $125,000 income cap for individuals ($200,000 for couples), and if you’re buying in Toowoomba the property must be worth less than $400,000 ($500,000 if it’s brand new).
- The First Home Super Saver Scheme (FHSSS) aims to help buyers save a deposit faster by making additional superannuation contributions, which are taxed at a lower rate of just 15%. The Budget announcement saw the savings cap raised from $30,000 to $50,000, allowing first home buyers to make additional contributions up to this amount, which they can then withdraw and put towards a home deposit.
These federal schemes are in addition to the State Government run schemes for First Home Owners.
Single-parent families offered a helping hand onto the property ladder
There is no doubt that homeownership has long-term social and economic benefits, and the government has shown through the budget that it’s keen to support this. Single parents have been given a helping hand by the introduction of a completely new scheme called the “Family Home Guarantee”.
It works in a similar way to the FHLDS, by allowing single parents with dependents to buy a property with a 2% deposit. The government will guarantee up to 18% of the cost of the property, which not only means they need to save less of a deposit, it also eliminates the need to pay Lenders Mortgage Insurance, which can often be expensive.
Single parents can be entering the property market for the first time, or re-entering the property market after time out of it. To be eligible, they must earn less than the income cap of $125,000, and be buying a new or existing property valued up to $400,000, if that property is here in regional Queensland.
If you’re interested in buying or selling in our local area, get in touch.