Turnbull gov’t launches next phase of its comprehensive housing affordability package

Sydney Homes — Workers renovate a house in the Sydney suburb of Cammeray, Australia, August 3, 2015. Reuters/David Gray

The Turnbull government is releasing a draft legislation to help Australians buy their first home. It also seeks to eliminate the barriers that prevent retirees from downsizing.

First Home Super Saver Scheme (FHSSS) allows first-home buyers to save for a deposit in their superannuation accounts. Those looking to buy their first home can contribute $30,000 or up to $15,000 per year within existing caps and withdraw contributions along with deemed earnings to help fund a deposit on their first home.

Legislation to establish the scheme will also allow Aussies aged 65 and above to make an exempt contribution to their superannuation after downsizing their family home. The measure will help free up the stock of larger homes for younger Australians.

Older Aussies can sell their homes and contribute up to $300,000 of the proceeds into superannuation. This special non-concessional contribution will not be affected by the existing voluntary contribution rules and restrictions.

Both members of a couple can take advantage of the measure. A couple can contribute up to $600,000 from the proceeds of selling their home.

Furthermore, retirees can make an exempt non-concessional contribution to their superannuation by the time they relocate into a home that that better suits their needs, such as an aged-care facility. They can also do so when they join the rental market.

The measures are slated to commence on July 2018. Voluntary contributions made from July 2017 will be eligible for withdrawal as long as all of the requirements are met. According to a joint press release by the assistant minister to the treasurer and Hon Michael Sukkar, legislation will be introduced before the commencement date to provide certainty to savers and sellers alike.

The government has also released draft legislation to stop foreign residents investing in residential real estate claiming the main residence exemption. Foreign tax residents would not be able to claim the main residence capital gains tax (CGT) exemption when they sell property from Budget night 2017.

Those who hold property on Budget night are still allowed to claim the exemption until June 2019. The legislation will also amend the CGT principal asset to test to apply on an associate inclusive basis to ensure that foreign tax residents cannot escape a CGT liability by disaggregating indirect interests in Australian real property. The changes are part of a package that is estimated to add $600 million in revenue over the forward estimates.

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