Going through the Budget 2017 information so far made available in the online media, all I can say is I'm very unimpressed with what the Federal Government has come up with for First Home Buyers.
Now I could be wrong, but it looks like a shocking scheme tying up people's money for perhaps $2,000-$3,000 benefit per person per year. That is a benefit of up to $12,000 for a First Home Buyer couple over two years or more years.
From what I read, individuals can put in extra money (additional contributions) into their superannuation starting on July 1st 2017. Let's say they put aside the full $15,000 each per year. That money is tied up for 12 months before they can access the money. A couple could put aside $30,000 in that time, if they had that money available. Two years minimum to get the full value from the scheme and save $60,000.
Now what if the First Home Buyers decide to purchase within the next twelve months. Since the money can only be withdrawn after a year, that saving could be locked up in the superannuation until retirement.
In the meantime, houses are going up in Melbourne and Sydney at over 10% a year. Even at a reasonable long term average of 5%, a $600,000 house (if you can possibly find one) has gone up $30,000 in the first year, far exceeding the $12,000 possible benefit from the scheme over the two years.
If really doesn't make much sense and people could potentially lock up their savings for a very long time if things change, such as they find and buy a great house at a great price in the meantime. Since they can't withdraw their money at that time, their savings become superannuation and I don't think that's what people may have wanted. Take that same money and put it into the mortgage and I'd guess you'll get a better return than most super schemes. Keep in mind money offset against a mortgage is interest saved and that's tax free, equivalent to 7-8% compounding interest and even more when interest rates go up.
Compare this with what the Victorian State Government has done. By removing stamp duty for properties under $600,000, a saving for First Home Buyers of around $15,000 instantly come July 1st, and much more for homes in the low $600,000 price range. No lock in. No lengthy period to wait. No potential for your money to be tied up should your circumstances change.
Before taking advantage of the Federal Government's scheme do think things through for yourself. It's not every day that the government gives you a tax saving incentive worth up to $12,000. But then again it does come with strings and that could end up biting you if you're not careful.
Superannuation is a very complex and ever changing area. Make sure you understand fully the implications of getting involved with anything to do with superannuation. Seek professional advice first if you have to.
Kelvin Eldridge
Now I could be wrong, but it looks like a shocking scheme tying up people's money for perhaps $2,000-$3,000 benefit per person per year. That is a benefit of up to $12,000 for a First Home Buyer couple over two years or more years.
From what I read, individuals can put in extra money (additional contributions) into their superannuation starting on July 1st 2017. Let's say they put aside the full $15,000 each per year. That money is tied up for 12 months before they can access the money. A couple could put aside $30,000 in that time, if they had that money available. Two years minimum to get the full value from the scheme and save $60,000.
Now what if the First Home Buyers decide to purchase within the next twelve months. Since the money can only be withdrawn after a year, that saving could be locked up in the superannuation until retirement.
In the meantime, houses are going up in Melbourne and Sydney at over 10% a year. Even at a reasonable long term average of 5%, a $600,000 house (if you can possibly find one) has gone up $30,000 in the first year, far exceeding the $12,000 possible benefit from the scheme over the two years.
If really doesn't make much sense and people could potentially lock up their savings for a very long time if things change, such as they find and buy a great house at a great price in the meantime. Since they can't withdraw their money at that time, their savings become superannuation and I don't think that's what people may have wanted. Take that same money and put it into the mortgage and I'd guess you'll get a better return than most super schemes. Keep in mind money offset against a mortgage is interest saved and that's tax free, equivalent to 7-8% compounding interest and even more when interest rates go up.
Compare this with what the Victorian State Government has done. By removing stamp duty for properties under $600,000, a saving for First Home Buyers of around $15,000 instantly come July 1st, and much more for homes in the low $600,000 price range. No lock in. No lengthy period to wait. No potential for your money to be tied up should your circumstances change.
Before taking advantage of the Federal Government's scheme do think things through for yourself. It's not every day that the government gives you a tax saving incentive worth up to $12,000. But then again it does come with strings and that could end up biting you if you're not careful.
Superannuation is a very complex and ever changing area. Make sure you understand fully the implications of getting involved with anything to do with superannuation. Seek professional advice first if you have to.
Kelvin Eldridge
No comments:
Post a Comment