Should Labor win Government, it has promised to establish low-tax saving accounts to encourage first home buyers to save more towards a house deposit.
Under the scheme, which will cost $600 million over four years, first home buyers can make a pre-tax deposit of up to $5000 per year into a special deposit saving account that will be taxed at just 15%. Another $5000 per year after-tax can also be deposited, with interest from the full sum in the account also taxed at the low 15% rate.
The money can only be accessed after four years and must be put towards a home deposit – money can still be withdrawn if not used for that purpose, but the value of the tax concessions will be subtracted from the sum withdrawn. A minimum deposit of $1000 per year is required to keep an account open and the total amount deposited cannot exceed $50,000.
By encouraging first home owners to save, the scheme will help reduce debt levels and the use of expensive deposit guarantees like mortgage insurance, according to Housing Industry Association senior executive director Chris Lamont.
For many, however, even the $1000 minimum may be tough for some people to meet, particularly given that rental prices are on the high side, but certainly some assistance and encouragement is better than nothing. Simon Turner
Read Marquette Turner’s account of the Coalition’s policy