A New Financial Year Brings New Incentives And Support
Happy new financial year. Like every July there are new incentives and support mechanisms that our Federal and State governments have introduced through their budgets. Below is a summary of what is in play for this new financial year from 1 July 2021.
Downsizing contributions into superannuation
Selling the family home can be a great way to release some of the equity that has been built up in the home and to then use it to make an extra contribution to your super account. Proposed in the Federal Budget was a change of the age threshold from 65 to 60 years old to be eligible for the downsizer superannuation contributions.
If passed through Parliament it will be mean if you are 60 or over and the kids have flown the coop, you will be able to consider moving to a smaller or more suitable home and move money into superannuation and receive concessional allowances.
From 1 July 2021, if you are a self-funded retiree and 60 years old or older and meet the eligibility requirements, you may be able to make what is called “a downsizer contribution” into your superannuation of up to $300,000 from the proceeds of selling your home. Couples can contribute up to $300,000 each into their super accounts which gives a total contribution per couple of up to $600,000.
It’s also worth remembering that when these contributions are moved into your superannuation and you start drawing an income, your investment earnings are tax free. Whereas if you were to invest the sale proceeds outside of super you would be liable for tax on any income from the investments. The Federal government has forecasted 15,000 sales annually through the scheme.
Stamp Duty from 1 July 2021
The most notable change for 1 July is the expiration of the Victorian Government’s 25% discount on stamp duty for vacant land and existing residential purchases up to $1 million. The good news is within the City of Melbourne the 50% concession will still be available for new residential properties up to purchases of $1million and a full exemption will be available for new residential properties that have remained unsold for 12 months or more since completion of construction.
There is a new premium stamp duty rate for property transactions with a value above $2 million, increasing stamp duty payable to $110,000 plus 6.5% of the dutiable value in excess of $2 million. There is also a temporary increase in the eligibility threshold for the off-the-plan duty concession to $1 million for all home buyers. For more information visit
https://www.sro.vic.gov.au/offtheplan
Victorian Land Tax from 1 July 2021
The general land tax threshold will increase from $250,000 to $300,000. (The land tax threshold for land held on trust remains unchanged at $25,000.)
Land Tax rates for high value landholdings will increase, for taxable landholdings exceeding $1.8 million — the land tax rate will rise by 0.25 percentage points, and for taxable landholdings exceeding $3 million — the land tax rate will rise by 0.30 percentage points.
Refer to The State Revenue Office for more information. https://www.sro.vic.gov.au/state-budget-2021-22 announcements.
Family Home Guarantee
Handed down in the 2021 federal budget from May, the government announced a new deposit program to support single parents with dependent children to build a new home or purchase an existing home with a deposit as low as 2%.
Called the Family Home Guarantee there will be 10,000 places over four years, the scheme also helps single parents who have previously been owner-occupiers and are looking to re-enter the housing market.
The federal government estimates 125,000 single parents with dependants may be eligible for the guarantee in the next 12 months.
The program modeled off FHLDS supports low and middle-income earners with an income up to $125,000 with child support payments excluded.
Family Home Guarantee price caps from 1 July are:
Melbourne and Geelong – up to $700,000 Rest of Victoria – up to $500,000
First Home Buyers from 1 July 2021
Announced in May through the Federal Government’s Budget is a number of new schemes that will assist first-home buyers. 20,000 places in total across the 2021/22 financial year have been allocated for low deposit buyers to assist with their first home loan.
There are also saving plans that have been enabled through their superannuation to assist with saving for a first home deposit. The Federal budget also added a new program to help 10,000 single parents over four years buy their first home or re-enter the property market with a very low deposit.
Below is a line by line list and guide on each scheme and how it works.
First Home Loan Deposit Scheme (FHLDS)
The First Home Loan Deposit Scheme first home buyers buy with a deposit as low as 5%, with the federal government providing a guarantee to the lender of up to 15% of the loan. The government effectively covers the cost of lenders’ mortgage insurance (LMI) that is normally required by homebuyers who do not have a 20% deposit. Lenders’ criteria still apply.
The scheme provides up to 10,000 first home loan guarantees each financial year until they are all run out or 30 June 2022. The National Housing Finance and Investment Corporation( NHFIC) administers the program which is available for established and new dwellings and covers houses, townhouses, apartments, a house and land package and land and an off-the-plan house and land, apartments or townhouses. The scheme is open to Australian citizens aged over 18 who have a taxable income no greater than $125,000 per year for individuals and up to $200,000 for couples. Buyers in the scheme must have a 5% deposit and can only be owner-occupiers.
Price thresholds apply, with the scheme targeted at helping low and middle-income earners.
Here are the price caps that from 1 July 2021:
Melbourne and Geelong – up to $700,000
Rest of Victoria – up to $500,000
Buying applies through one of the participating lenders, which are listed on the NHFIC website, or through their authorised representatives. Visit https://www.nhfic.gov.au/
The FHLDS can be used in conjunction with the federal government’s First Home Super Saver Scheme. First-home buyers may also be eligible for state and territory grants and concessions.
New Home Guarantee
Now called the New Home Guarantee, the new homes scheme is a temporary extension of the FHLDS. This scheme is designed to help first-home buyers who are low and middle-income earners build or purchase a new home sooner with a deposit as little as 5%. Like the FHLDS, the government provides a guarantee to the lender of up to 15% of the property purchase price.
The scheme was introduced to stimulate the construction industry, there are 10,000 FHLDS places available from 1 July year that can only be used by first-home buyers for new homes or even major renovations or a knockdown and rebuild, but first-home buyers looking to buy a property to do their own substantial renovations or knock-down rebuilds are not eligible for the New Home Guarantee.
The government has left the property price caps unchanged but from 1 July the construction commencement timeframe was extended to 12 months.
The New Home Guarantee price caps are:
Melbourne and Geelong – $850,000
Rest of Victoria – $550,000
The same eligibility requirements apply under the main FHLDS.
First Home Super Saver Scheme (FHSS)
The First Home Super Saver Scheme is designed to help first-home buyers raise a deposit through their superannuation account. The federal government announced in the May budget an increase in the maximum amount of voluntary contributions under the scheme up from $30,000 to $50,000.
The scheme works by providing concessional tax treatment of superannuation allowing first home buyers with voluntary payments of up $15,000 per year, enabling a quicker path to save for their deposit.
Like with all the other first home buyer schemes the homes must be owner-occupied. Under the FHSS scheme, buyers can enter into a salary sacrifice agreement with their employer or by making voluntary personal super contributions.
More information can be found here on the FHSS :
https://www.ato.gov.au/individuals/super/withdrawing-and-using-your-super/first-home-
super-saver-scheme/
