Last week, changes to existing laws were enacted in federal parliament, aimed at helping Australian’s of different financial contexts get into the property market. These laws have changed in response to the dramatic increases in property prices around Australia over the last couple of years. This article, written by the experts at Vision Property and Finance, aims to outline the changes to superannuation and property for prospective property owners.
Changes to Voluntary Super Contributions – First Home Buyers
The First Home Super Savers Scheme (FHSSS) is a scheme set up by the government to allow first home buyers to quickly arrange a deposit for a property. Under this scheme, first home buyers have the ability to contribute to their house deposits through voluntary super contributions. These contributions are taxed at the 15% rate of superannuation, rather than a higher income tax, allowing for savings to be better realised.
Originally, First Home Buyers were able to save up to $30,000 through the FHSSS. However, this scheme has changed to allow for savings up to $50,000. Under this scheme, a First Home Buyer only pays an additional $7,500 in tax to achieve $50,000 in savings, instead of the significantly higher amount they usually would pay in their income bracket.
Changes to Post Tax Contributions – First Home Buyers
Another change to superannuation and property is the eligibility for downsizing, older property investors to receive significant post-tax contributions to their super. To encourage older Australians to downsize and increase the supply of larger family homes, the federal government allows for up to $300,000 of the sale price of the downsized home to be put into super as an after-tax contribution. This means that the government considers that the tax on this amount has already been paid.
Originally, Australian’s aged 65 and over were only eligible for this downsizing incentive. However, this legislation has been changed so that Australian’s aged 60 and over can downsize.
Changes to Minimum Monthly Earnings – People Working at Multiple Jobs
One of the final changes to superannuation and property is the removal of the minimum $450 a month threshold for employers to make superannuation contributions. Originally, if you earned under $450 a month at a workplace, this employer was not responsible to contribute to your superannuation.
This minimum threshold has been scrapped, meaning that no matter how much you earn at a workplace, employers still need to contribute to super. If you work at multiple organisations or work little hours, you will still be able to contribute to your super, and your FHSSS amount.
Interested in how you can use your super to get into the property market? Vision Property and Finance has over 20 years of success in securing financial futures for our clients. You’d be surprised at how much you can borrow! Have a chat with us here.