The 2020 Federal Budget announced a range of economic measures to help support individuals and businesses through the COVID-19 downturn. It also includes some initiatives that could be helpful if you want to buy your first home, build a granny flat or put money aside to invest. Even though 2020 has been a difficult year for many of us, these measures will hopefully stimulate both the economy and the property market so we can buy, build and invest with confidence again.
Here are three proposals from this year’s Budget that could help you realise your property goals sooner.
1. More help for new home buyers
If you’re looking to buy your first home, the 2020 Budget delivered some good news.
The First Home Loan Deposit Scheme, originally introduced on 1 January 2020, will be extended – making it available to an additional 10,000 first home buyers this financial year. The scheme gives first home buyers the ability to purchase newly built homes with just a 5% deposit, with the Government guaranteeing up to 15% of the loan.
The Budget also provided a $1 billion boost to the construction of affordable housing, to help put more Australians in their own homes, and $150 million to provide 360 home loans in regional Australia as part of the Indigenous Home Ownership Program. Combined with the $25,000 cashback announced in June for first home buyers, these proposals should make it easier to get a foot on the first rung of the property ladder.
2. CGT exemption for granny flats
From 1 July 2021, homeowners will no longer have to pay capital gains tax (CGT) for a granny flat on their property – provided there’s a formal written agreement in place.
This aims to give greater protection to people living in a granny flat, particularly those who have made a financial contribution to the property. It also protects the owners of the property, by removing the additional CGT liability when the property is sold – currently a barrier to creating formal granny flat agreements.
The exemption only applies when the resident of the granny flat is an older person or someone with a disability – typically a family member or someone with close personal ties.
3. Tax cuts and business incentives
For those saving to buy property, whether it’s a first home or investment, the Budget’s tax relief measures could provide a helping hand.
Personal tax cuts previously scheduled to begin in July 2022 have been brought forward to 1 July 2020. This includes an increase to the low income tax offset to include taxpayers earning up to $45,000 a year. Top tax thresholds have also risen – with the 19% tax rate now starting at $45,000 and 32.5% tax rate at $120,000.
This effectively provides an extra year of tax savings, which you could use to put towards your property goals, and it could also increase your borrowing capacity when you’re ready to apply for a mortgage.
If you’re a business owner, there are plenty of measures in the 2020 Budget that are designed to help you get your business plans back on track. Here are two ways you might be able to do this:
- The instant asset write-off allows businesses with annual turnover of less than $5 billion to make a full deduction on the value of any new assets you purchase.
- The JobMaker Hiring Credit will pay you $200 a week for 12 months if you hire someone who is between 16 and 29 years of age, and $100 per week if they’re aged 30 to 35. The person you hire must currently be out of work and receiving government support payments (e.g. JobSeeker).
Get in touch
As your mortgage broker, we can help you understand the impact of the latest Federal Budget and help you take advantage of the opportunities it presents. If you have any questions or would like to know more, please reach out and we’ll be happy to help.