Both Labor and the Coalition have made big pitches to first home buyers as the election heads towards the finish line.
A re-elected Labor Government will give all first home buyers access to 5 per cent deposits and invest $10 billion to build up to 100,000 homes for sale only to first home buyers.
Meanwhile, an elected Dutton Coalition Government, first home buyers will be able to claim a tax deduction on mortgage interest payments for new build homes.
Labor’s plan to invest $10 billion to build 100,000 homes:
- The homes will be reserved for purchase by first home buyers only and Labor will partner with both state developers and the private sector to deliver the homes
- The $10 billion investment comprises $2 billion in grants and $8 billion in zero-interest loans or equity investments primarily to states and territories. States and territories will be required to match the $2 billion federal government grant contribution
- Labor will work with the states and industry to identify suitable projects and states and territories will fast-track land release, upzoning and planning approvals with the first projects expected to start in 2026-27.
Labor’s plan to expand the First Home Guarantee scheme to all first home buyers:
- Expanding the current scheme, every first home buyer will be eligible to buy a home with a five per cent deposit and avoid lenders mortgage insurance, with the remaining fifteen per cent guaranteed by the government
- From 1 January there will be no income caps or caps on places for scheme access and property price limits will be raised to average house prices in each city and region.
The Coalition’s First Home Buyer Mortgage Deductibility Scheme:
- The deduction is for new dwellings that have not been occupied
- Australian citizens must be owner-occupiers of the purchased dwelling over the entire period of deductibility and meet an income test of $175,000 for individuals and $250,000 for joint applicants
- For a mortgage in excess of the $650,000 cap, the deduction will be allowed for interest costs incurred on the first $650,000 of the mortgage.
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As an illustration, a first home buyer with a taxable income of $120,000 with a $650,000 mortgage at 6.1 per cent will receive a benefit of around $12,000 a year.
Coalition changes to the First Home Guarantee Scheme
- The income cap for individuals will increase from $125,000 to $175,000
- The income cap for joint applicants will increase from $200,000 to $250,000
- The property price caps will increase
- The number of places under the First Home Buyer Guarantee and Regional First Home Buyer Guarantee will be uncapped