Federal budget 2017: tax breaks for first home buyers

Lots of speculation but now it's confirmed. Although the details will make all the difference but this might shake things up a bit further.

Might end up slowing demand in the short-medium term since FHBs would wait on their savings to rack up and with IR rates on the up and housing demand already slowing, might actually stall growth or even send us into negative territory.

On the other hand, we have the VIC government stamp duty concessions for FHB so that might increase demand for whoever is ready to buy now in VIC.

I think the saying markets within markets has never been so relevant!

Government to reintroduce tax breaks for first home buyers

 

Is the FHB tax break capped at 5k per year?
if so, for someone at 30% tax bracket thatS a grant of 1.5k/year
I think its just a election googly for the peanut gallery.

 

Agreed @TheSackedWiggle ... Although not too sure about the capped yearly figure.

Say a Melbourne median house price is around $820k so to save a 10% deposit, you would need $82k put away. So over 4 years,that's $20k p.a.or $384pw.... Don't think many people can afford to put that much money on the side. That's also assuming no growth during that 4 years.

Politicians meddling with things just to be seen doing something...

 

What are the rules these days on LVR for owner occupiers? 20,10,5%?

So instead of letting people raid their super, the plan is to let them intercept breadcrumbs of future super contributions? Doesnt sound like a solution at all.

 

House price affordability is a state by state issue. If a state increases supply: house prices become affordable.

And this measure sounds very similar to the labour initiative. That did not work.

How to increase supply is a difficult question.

 

To increase supply is problematic.
The more you release the less there is in the pipeline. Costs to subdivide escalate. Land can be cheap but construction rapidly gets expensive. Affordability falls.

I know it is not going to happen but one way to assist supply would be to simplify the main residence exemption. ONE property per couple - One choice up front and it cant be changed, No others, no other pre-CGT properties once that choice occurs (choose the pre-CGT or the main residence) , no absence rules, no foreign property, etc and tax all homes when it isnt a main residence. Remove the 50% discount on all residential property and bring back indexation.

Tax will demotivate property accumulation for some (not all)

 

It won't help anyone currently looking to buy their first home or in the next year but might for future buyers.

 

Allowing older Australians/pensioners/baby boomers to sell their PPORs and downsize into Retirement Homes and Aged Care facilities without affecting their pensions and aged care fees would increase supply.

 

Yes it would. A single pensioner or even a couple rattling around in a 4x2 does nothing for supply. It is estimated there are thousands of these.

 

Yep, my Mum is one of these. If she sold her house, her pension would go down and her aged care fees would go up.

Double whammy. So we do nothing.

 

Plus, where would she go? Let's assume she downsizes:
- commission on selling the old house
- stamp duty on the new house
- conveyancing fees on both properties
- stress, hassle and cost of moving
- reduced pension
- may lose pension card
- may lose health care card

It's not a very attractive proposition, is it? Interest groups and the opposition can bleat on about housing affordability and negative gearing as much as they want but until the issues above are addressed there will be tens of thousands of underutilised houses across Australia.

 

I wish this post was being debated on the TV instead of all the other useless Blame the Baby Boomers stuff last night.

 

I wonder if the Politicians will ever wake up that to enormously help the affordability of housing, they merely only need to slow down the immigration rate rather than trying these various "incentive" schemes they have been trying for decades - which have never worked - and/or limit/cease any foreign ownership of residential property other than by Aus citizens?
Once the volume of humans seeking accommodation is decreased and therefore exceeded by the supply, then the demand slows and the prices will ease...very hard to get top dollar if no-one is buying.
Of course; we all want our own houses to continue to sky-rocket; so strike that statement!

 

I agree. Stimulating demand without increasing supply will only push house prices up. It seems logical but how many times in the past 10 years have the feds stimulated demand without increasing supply? And what has happened to house prices?

 

This might not be popular here and I don't care as it does not effect me but if I was trying to improve the situation I would consider capping NG. Something like a 4 million (equity) threshold and then it is reduced for each million in equity or liquid assets.

 

I have terrible reception here. Is iView live? Or is it delayed? What's the best internet way to watch the coverage?

 

Iview is usually posted up after the last time it airs in oz. So that's Perth. Maybe 11 for an 8.30 show. However, their news channel 24 whatever is streamed live and I'd imagine they will be covering the budget.

 

Downsizing isn't really a thing in Australia. I know more people who have purchased bigger houses in retirement than the other way around. Upgrading to bigger and bigger houses is a big part of our culture and people get too used to it to downsize.

 

what also gets my goat is when the media mentions NG, they always use the model of the greedy investor with a swag of IP's under their belt, out there shutting the battlers out at every auction.
The reality is that historically, only about 1/3 of all resi property sales are to investors.
Out of that group, only about 5% of all investors have more than 2 IP's...not a very large group overall, yet the media spin it like it is all of us.

 

So the conclusion is FHBers can salary sacrifice 15K a year or 30K max total towards a house. A pittance.

Also worth noting is that plant & equipment depreciation has taken a hit, unless you actually spent the money you can't claim it on your next purchase