# First Home Buyers Tax Break



## prawn_86 (4 February 2008)

> FEDERAL cabinet has approved a scheme offering an effective tax break for aspiring first homeowners, giving them incentives to save a deposit.
> 
> Treasurer Wayne Swan said cabinet had agreed on the first home saver account, first flagged during the election campaign.
> 
> ...




How will they monitor what accounts are specifically for houses? Or will a new account need to be set up? And what about those saving via shares/markets, i guess it would make sense to take the cash out if what the gov gives is better than current returns?

Full article:

http://www.news.com.au/business/story/0,23636,23157163-462,00.html


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## Nyden (4 February 2008)

prawn_86 said:


> How will they monitor what accounts are specifically for houses? Or will a new account need to be set up? And what about those saving via shares/markets, i guess it would make sense to take the cash out if what the gov gives is better than current returns?
> 
> Full article:
> 
> http://www.news.com.au/business/story/0,23636,23157163-462,00.html




I'm having difficulty in understanding; will the government contribute (give you) 15% of whatever you put in? Also, with the 5k limit - would this be up to 5k of savings ... or up to 5k they will contribute?

This actually sounds really good, especially with interest rate rises ... families are absolutely struggling these days

Might even be better than my ING account


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## prawn_86 (4 February 2008)

My take is they will give you 15% on up to 5k worth of savings.

So if you saved 5k after tax for a first home they would give you $750.

Also, if you do need to separate account, then what happens if for some unforseen reason you need to withdraw it and not spend on a house?


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## MS+Tradesim (4 February 2008)

This sets the stage for the next property boom. FHOG deja vu. Only good I can see is that it might encourage saving.


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## Buster (4 February 2008)

Hmmmm..

Many more questions than answers at the minute, but it certainly looks like a great opprotunity at the moment (without the specifics..) for the young troopers out there..  My young bloke is just 16, but I'll certainly be investigating this initiative for his savings account..

Next property bubble?? I agree Tradesim..

Regards,

Buster


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## Nyden (4 February 2008)

prawn_86 said:


> My take is they will give you 15% on up to 5k worth of savings.
> 
> So if you saved 5k after tax for a first home they would give you $750.
> 
> Also, if you do need to separate account, then what happens if for some unforseen reason you need to withdraw it and not spend on a house?




Hmm, if that's the case; that's not all that great.

I was hoping for 5k! 

750 is really just a drop in the ocean, isn't it? Gosh, that's only a few weeks worth of interest on the mortgage ...

Maybe good for those saving up for a caravan, doesn't help those who want a home though?


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## prawn_86 (4 February 2008)

Its not much, but i think you would find the average person would struggle to save 5k in a year, unfortunately. Hell im a student and i put away that much a year and still go overseas each year also.

I have mentioned on my blog about financial education and whether govs should be responsible, which seems apt to this discussion


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## Nyden (4 February 2008)

prawn_86 said:


> Its not much, but i think you would find the average person would struggle to save 5k in a year, unfortunately. Hell im a student and i put away that much a year and still go overseas each year also.
> 
> I have mentioned on my blog about financial education and whether govs should be responsible, which seems apt to this discussion




But, if they struggle to save 5k a year ... how are these people ever going to be able to pay off a mortgage?

Just seems nonsensical to me, is all.


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## prawn_86 (4 February 2008)

Nyden said:


> But, if they struggle to save 5k a year ... how are these people ever going to be able to pay off a mortgage?
> 
> Just seems nonsensical to me, is all.




Totally agree, hence the amount of predicted people in mortage stress.

I think that once ppl get a house they are 'forced' to save, which is why adjusting interest rates works so well.


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## Mofra (4 February 2008)

I would like to know how you qualify.
I have investment property but I have never lived in a property I own, so I am still eligible for FHOG if I choose to apply later.

Would the same apply for this savings account? 
Given I salary sacrifice much of my salary, might I qualify as a "low income earner" given what I submit to the ATO every year?


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## ROE (4 February 2008)

crazy ideas more reason for the developers to charge you more for housing...
the only way to bring housing down is to provide no subside for anything 
investor get none, first home buyer get none.

and if investors are stupid enough to get negative income asset, that their lost money.

That way people dont speculate and buy what they can afford...


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## Happy (5 February 2008)

I understood that saving was 15% on marginal tax rate.
So 16yo would have to earn at least $6000 pa to get over tax-free amount.


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## numbercruncher (5 February 2008)

I guess its better than a kick in the teeth, but still doesnt sound very exciting to me !




> As more strong economic figures all but locked in an 11th consecutive interest rate rise, Treasurer Wayne Swan unveiled a scheme providing annual benefits of up to $1500 for people voluntarily contributing up to $5000 a year into special first home saver accounts to be run by superannuation funds.
> 
> The scheme effectively gives depositors a 15% discount on their marginal tax rate, although they will be forced to wait five years before the money can be accessed to buy a house.




http://www.theage.com.au/news/national/850m-plan-to-cut-home-pain/2008/02/04/1202090323369.html


A five year plan ? Funnily enough 5 years coincides with the year that the peak amount of Baby Boomers are retireing, maybe the Gov expects their houses to flood onto the market then ?


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## roland (5 February 2008)

I think that a real solution would be to try and de-centralise the population and make regional areas more attractive.

People need jobs, health care, schooling and some visions for the future in an environment that is safe, comfortable and interesting.

Why can't we empower some of our regional centres with all of the above to attract people away from our 4 or 5 bottleneck cities?


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## numbercruncher (5 February 2008)

Bit more



> The Government will refund all but 15 per cent of the tax paid on income that is deposited in the accounts. The earnings in the accounts will be taxed at only 15 per cent.
> 
> The accounts need to be held for a minimum of four years. The tax refund will apply to contributions of up to $5000, with the low rate of earnings tax applying to contributions of up to $10,000 a year.
> 
> *For people earning less than $80,000 a year, the tax refund is worth a maximum of $750 a year, while someone earning up to $180,000 would get a maximum benefit of $1250 a year. *




http://www.news.com.au/business/story/0,23636,23162560-5013951,00.html?from=mostpop

Actually now Ive read that it just seems absolutely pathetic, after 5 years people earning under 80k could expect to have like 4k extra 

Maybe the idea is more along the lines of encouraging people to save ? than any sort of real fix ?


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## Julia (5 February 2008)

numbercruncher said:


> Bit more
> 
> 
> 
> ...




Or perhaps it's being able to say that they kept an election promise.
The amount certainly seems little more than symbolic.


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## stisoon (23 February 2008)

my take on this is that at least the next generation of buyers are getting some assistance. it is better than nothing and it will at least help establish some saving discipline for those that are starting out.


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