- Tags: Property Investment, First Home Buyers, Tax
Superannuation Tax Breaks for First Home Buyers - Finally!
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The Federal Government has actually come up with a clever way to help first home buyer's crack into the property market. Before you get too excited, no you can't quite use your superannuation to buy a property, which has been the cause of many arguments every time it is raised. However, in the last budget the government has created a scheme whereby first-time buyers can salary sacrifice into their superannuation account tax-free. How great is that!
Essentially from 1 July 2017 individuals can make voluntary contributions of up to $15,000 a year up to a total of $30,000 in their superannuation account to purchase a first home.
The scheme applies to each first home buyer so a couple can each pay into their super fund. At the end of 3 years they should have a combined $51,520 toward their deposit.
Like normal superannuation contributions from your employer these contributions are also taxed at 15% along with their deemed earnings while they are in the fund. Withdrawals will be taxed at marginal tax rates less a 30% offset and are allowed from July 1, 2018.
The budget papers estimate that for most people the First Home Supersaver Scheme could boost the savings they can put towards a deposit by at least 30% compared with saving through a standard deposit account.
Similar arrangements are available to self-employed people or where employers do not offer salary sacrifice.
For the majority of first-time buyers it is not likely to be an issue however the compulsory and voluntary contributions cannot exceed the super cap which is $25,000 in 2017 – 18.
The scheme will be administered by the ATO which will determine the amount of contributions that can be released and instruct superannuation funds to make those payments accordingly.
The government has provided an online estimator to help you understand what's on offer. To access the estimator go to www.budget.gov.au/estimator
You can also make additional non-concessional contributions from after-tax income and earnings of those contributions will benefit from the concessional rate of tax and superannuation and the higher returns often realised in superannuation schemes.
To find out more go to http://www.budget.gov.au/2017-18/content/glossies/factsheets/html/HA_14.htm
by David Hamilton
Superannuation Tax Breaks for First Home Buyers - Finally!
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