Recent changes to superannuation funds may start to affect the housing market. Two such measures are the First Home Super Saver (FHSS) Scheme, and the downsizing contributions into superannuation funds. These changes were introduced by the Australian Government in the 2017-2018 Federal Budget.
Here is a brief look at what these two super housing measures are and what they could mean moving forward.
First Home Super Saver Scheme
The FHSS Scheme, which went into effect in July of 2017, allows those who have never purchased a home before to make voluntary concessions into their super funds to help save for a home. And as of July 1, 2018, you can now apply to release those contributions to go towards buying a home.
No matter your age, you can make eligible contributions into your super, according to the Australian Taxation Office. However, only those over 18 will be able to withdraw the funds. You must also meet the following criteria:
- Have never owned property of any kind in Australia.
- Must plan to live in the property at least 6 months out of the first 12 months of ownership.
- Have never released FHSS funds previously.
Note that, under the scheme, you can only save a maximum of $30,000 toward a home in your super contributions, and per year, the maximum you can save for this purpose is $15,000.
Another change to super housing measures is downsizing contributions to supers. Beginning July 1, 2018, if you sell a home that you or your spouse has owned for at least 10 years continuously, you may be able to contribute some or all the money you make into your super. This figure is capped at $300,000 each or $600,000 between a couple. You must be 65 years of age or older to take advantage of this measure, according to the Australian Taxation Office.
This contribution will not count toward your caps. You can only take advantage of the amount for one home and cannot access it again if you sell another home. You must make the contribution within 90 days of selling the home.
Effects on the market
If new home buyers take advantage of the FHSS Scheme, it could mean that less home loans will be granted in Australia overall in the coming years, since people will be able to save about 30 per cent more towards a home, according to Treasurer Scott Morrison. And it could mean that more people will be buying homes.
The Australian housing market is currently in a minor downturn, according to Business Insider Australia. Whether or not that will turn around with the super changes has yet to be seen.
For more information about the new super housing measures and your options, contact our team today.