Budget 2021-2022 helping first home buyers and retirees

Find out how the 2021-2022 Budget will affect home ownership and retirement!

Pathways to home ownership

The Government recognises the importance of home ownership and the economic and social benefits it provides.

That is why the Government is establishing the Family Home Guarantee, creating a pathway to home ownership for single parents to enter or re-enter the housing market.

From 1 July 2021, the Government is providing 10,000 guarantees over four years for eligible single parents with dependants to build a new home or purchase an existing home with a deposit of as little as 2 per cent, regardless of whether that single parent is a first home buyer or previous owner-occupier.

The Family Home Guarantee is based on the successful First Home Loan Deposit Scheme and New Home Guarantee which are helping more than 26,000 first home buyers to enter the housing market sooner.

Emma is a single parent with two young sons, Brad and Patrick. Emma has found the perfect home for $460,000 but has struggled to save enough for the $92,000 deposit while paying rent.

With the Family Home Guarantee, and on the success of her application with a lender, Emma can now move into her dream home sooner with a $9,200 deposit.

Helping first home buyers into the market

Enhancing the First Home Super Saver Scheme to fast-track home ownership

The number of first home buyers is near its highest level since 2009, and accounts for nearly 40 percent of new owner-occupier loans, well above the 10 year average of around 30 per cent.

The Government is acting now to expand the First Home Super Saver Scheme (FHSSS) to ensure more young Australians can achieve the dream of home ownership.

The maximum amount of voluntary contributions that can be released from the FHSSS will increase from $30,000 to $50,000, effective from 1 July 2022. This increase will fast-track home ownership for first home buyers. It recognises that deposits required for home purchases have increased over the years given house price growth.

Cathy is an occupational therapist and earns $80,000 per year and wants to buy a new home. Using salary sacrifice, she annually directs $12,500 per year of pre-tax income into her superannuation account. After concessional contributions tax, her balance increases by $10,625. After four years, she is able to withdraw $45,226 of contributions and the deemed earnings on those contributions. 

Withdrawal tax is applied at a concessional rate of 4.5 per cent, which is Cathy’s marginal tax rate minus a 30 per cent tax offset. Cathy has $43,191 she can put towards buying her first home.

Cathy’s partner, Anthony, makes the same income and also salary sacrifices $12,500 annually to his superannuation fund over the same four years.

Combined, Cathy and Anthony have $86,382 to put towards their first home. This is $20,838 more than if they were to save in a standard savings account earning 0.05 per cent interest per annum.

A more flexible retirement

Giving older Australians, including self-funded retirees, greater flexibility to contribute to their superannuation and access their housing wealth

Reforms to the work test

From 1 July 2022, individuals aged 67 to 74 will no longer be required to meet the work test when making or receiving non-concessional or salary sacrificed superannuation contributions. This change builds on the Government’s previous reforms to age rules on superannuation contributions, and increases the ability of older Australians to make contributions to their superannuation.

Extending access to the downsizer contribution

From 1 July 2022, the minimum age for the downsizer contribution will be lowered from 65 to 60, allowing Australians nearing retirement to make a post-tax contribution of up to $300,000 per person when they sell their family home. This will provide greater flexibility for people to contribute to their superannuation. Around 22,000 individuals have already made downsizer contributions under the existing rules.

Improving the Pension Loans Scheme

From 1 July 2022, the Government is increasing the flexibility and attractiveness of the Pension Loans Scheme. For the first time, older Australians will be able to access a limited lump sum from the scheme. The Government will also introduce a No Negative Equity Guarantee to build confidence among older Australians to use the scheme. The Pension Loans Scheme allows individuals to supplement their income in retirement by borrowing against the equity in their property, assisting older Australians to maintain living standards in retirement.

Read Full 2021-2022 Budget