The government is moving forward with a slew of initiatives aimed at improving housing affordability, two senior finance officials said on Thursday.
In a joint statement, Finance Minister Scott Morrison and Assistant Minister to the Treasurer said legislation was introduced to Parliament seeking to:
First Home Super Saver Scheme
- enable prospective first home buyers to save for a deposit inside superannuation through the First Home Super Saver Scheme (FHSSS)
- allow older Australians to contribute the proceeds of the sale of their family home to superannuation
- better target deductions relating to residential investment properties
- boost the availability of rental accommodation in the market
Morrison and Sukkar said the FHSSS legislation will enable prospective first home buyers contribute up to $30,000 (up to $15,000 a year within existing caps) into superannuation. They will be able to withdraw the contributions from 1 July 2018. These contributions, along with deemed earnings, can be withdrawn for a deposit with withdrawals taxed at a marginal tax rate less a 30% offset.
“For most people, the FHSSS will enable them to boost the savings they can put towards a deposit by 30 per cent compared with saving through a standard deposit account. This will give prospective first home buyers a significant step up at a time when saving for a deposit is becoming increasingly difficult for many people.”
The downsizing measure enables older Australians to contribute proceeds from the sale of their family home into their superannuation accounts. “Many older Australians will be attracted to take up this concession and in so doing vacate larger properties which no longer suit their needs.”
Australians 65 years old and above can contribute up to $300,000 into their sure if they sell a home they held for no less than 10 years. Both members of a couple can take advantage of this initiative.
Protecting Negative Gearing
The government is seeking to protect the integrity of the tax system by preventing residential property investors from taking holidays at the taxpayers’ expense. Travel costs for individual investors inspecting and maintaining residential investment properties will no longer be deductible.
“By limiting plant and equipment depreciation deductions the Government is cracking down on investment property abuse by removing the existing opportunities for capital items to be depreciated by multiple owners in excess of their actual value,” said the officials.
The government wants to implement an annual vacancy charge on foreign owners of residential real estate where property is not occupied or genuinely available on the rental market for at least six months in a 12 month period.
“The vacancy charge builds on the Government’s existing foreign investment regime to increase the number of houses available to live in. The charge provides a financial incentive for the foreign owner to make their property available on the rental market,” said Morrison and Sukkar.
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