What support do First Home Buyers need in Treasurer Morrison’s first Federal Budget?
The Real Estate Institute of Australia (REIA) has called for more assistance for first home buyers in their pre-budget submission to the Federal Government.
REIA President Mr Neville Sanders said “We are asking the Federal Government (to) take a leadership role in urging all states and territories to take the same approach to the provision of assistance to first home buyers regardless of whether the dwelling is new or established”. Mr Sanders added that the Institute would like to see first home buyers have “access to their superannuation for the purpose of a home”.
In summary, REIA’s submission to the Government asks for:
- Negative gearing to remain in its current form
- Capital Gains Tax (CGT) Discount scheme to remain in its current form
- Stamp duty taxes to be abolished
- First home buyers be allowed access to their superannuation funds for the purpose of purchasing their first home
FHBA Responds to REIA’s submission
Co-founders of First Home Buyers Australia (FHBA), Daniel Cohen & Taj Singh, are happy to see first home buyer assistance on the agenda for the upcoming Federal Budget in the election year. However, they certainly don’t agree with all the measures proposed by REIA.
“First Home Buyers are statistically doing it harder than ever before” said FHBA co-founder Taj Singh. “This is for a variety of reasons, but certainly the current tax system is skewered to provide lots of assistance for investors, while leaving first home buyers to fight on their own in an investor driven market” added Mr Singh.
FHBA co-founder Daniel Cohen said while negative gearing and the CGT discount scheme have a place in the tax system, the REIA is clearly out of touch about the damage these schemes are doing to young Australians.
“How can first home buyers be expected to compete with investors, who have equity as well as more Government assistance than they do? How can a first home buyer win at an Auction when surrounded by taxpayer assisted investors, without over paying for the property?” asks Mr Cohen.
Mr Cohen added “Right now the interest of an investor home loan is being subsided by the Government. Lucky investors. Lucky banks.”
FHBA has it’s own 5 point plan to address housing affordability. The co-founders believe investor tax incentives should be wound back, without being completely removed. FHBA would also like to see more assistance for first home buyers, such as the return of The First Home Buyers Savers account.
FHBA’s 5 point summary includes:
- Reduce ‘interest costs’ deductibility on investments from 100% deductible to 50% deductible
- Introduce a tier scaled CGT (Capital Gains Tax) discount system so investors don’t receive a full 50% discount until after 36 months
- Provide first home buyers in every state a 50% stamp duty discount on existing dwellings and 100% discount on new dwellings
- Change land tax from value based to number of properties based. Land tax to apply from property number 3, except for foreign buyers it would apply from property number 1
- Reintroduce the First Home Savers Account with enhanced features such as an ability to salary sacrifice pre-tax wages, no tax on investment earnings, a reduced 3 year minimum investment rule and an ability to invest in assets other than cash such as managed funds
FHBA encourages Government Treasurer Mr Scott Morrison to consider the 5 point plan above in the upcoming Federal Budget.