If you’re a first-time home buyer with an outstanding HECS debt, you might be setting yourself up for a tax surprise.
CPA Australia senior manager of tax policy Elinor Kasapidis told nestegg that First Home Super Saver Scheme (FHSSS) amounts are taxed at the time they’re withdrawn to pay for a property purchase.
“This means that the deposited amount plus earnings will be added to the first home buyer’s taxable income for that financial year,” she said.
While the current maximum FHSSS contribution is $30,000, the government has flagged an increase to $50,000 in the future.
Ms Kasapidis said that this amount would be enough to push many taxpayers into a higher marginal tax rate, which could, in turn, increase their HELP repayments.
“This could lead to an unpleasant surprise when the tax bill comes,” she said.
Ultimately, Ms Kasapidis said that the FHSSS shouldn’t be treated any differently to any other financial agreement.
She recommended that consumers always read and make sure they understand the fine print of government programs to avoid unexpected liabilities.
“A tax agent can help you understand the tax consequences of participating in the FHSSS, including potential tax liabilities when you withdraw your FHSSS amounts,” she said.
Research recently released by Homeloanexperts.com.au earlier this year asserted that a majority of millennials believe that the housing market needs more regulation in order to slow housing price growth and entice more first home buyers into the market.
A further 40 per cent of those surveyed said that these new measures should look to target first home buyers directly, akin to the government’s First Home Super Saver Scheme.
In the absence of affordability, Homeloanexperts.com.au chief executive Alan Hemmings said millennials are looking to find new ways into the market.
“Whether this involves them delaying their purchase, turning to family members to act as guarantor or even considering other options like rentvesting, millennials are being forced to consider other methods in their property journey,” he said.
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