When the Federal Treasurer Scott Morrison delivered the 2017 - 2018 budget, there were winners and losers as usual. But for those about to take their first steps into the property market, there may have been greater wins than expected with the announcement of the Super Saver Scheme for First Home Buyers (FHSSS).
So, is this a win or not? A $30,000 deposit can hardly be considered realistic in today’s property market, particularly for buyers in inner city Melbourne or Sydney. Regional buyers may have a chance however and for them it could be quite effective as a savings strategy. First home buyers outside of the metropolitan areas may appreciate the more disciplined approach to saving - assuming their salary can stretch far enough to cover the extra contributions. With property prices more consistently achievable in regional areas and the day to day cost of living more manageable, this may be a great solution for what ends up being a really specific section of the population.
Of course, $30,000 is not to be ignored as a decent start for the first home buyer. However, for those already salary sacrificing into superannuation it could lead them into dangerous territory. Make sure you look carefully at the numbers first before assuming your salary can stretch far enough to cover the extra payments.
There are also tax advantages to consider, but understanding what they are may be the most complex part of the Australian Federal budget breakdown. The average Australian shouldn’t need an economics degree to understand the impacts on pre-tax contributions, or offsets against marginal tax rates, but in this case, they may just need one – even just to understand the ATO’s overview.
The best approach is to decide if the basic principle of the scheme will work for you. Can you afford the extra contribution? Will a $30,00 deposit, that you can’t access until the middle of next year, be of any use to you with regard to your current investment plans? If any of these seem viable then find a good financial advisor who can help you unpack the tax details in a clear and concise way.