iscover
iscover 
Peter Dutton’s Coalition Government announced the First Home Buyer Mortgage Deductibility Scheme.
The new policy allows for tax deductions on mortgage interest payments for first home buyers on new build homes, for the first five years of the mortgage.
Under the First Home Buyer Mortgage Deductibility Scheme:
- First home buyers who purchase a newly built home as their principal place of residence will be eligible.
- Buyers can deduct the interest paid on up to $650,000 of their mortgage from their assessable income.
- There is no cap on the overall mortgage size or home price, but only the interest on the first $650,000 of the loan will qualify for deductions.
- The measure will be available to individuals earning up to $175,000 and joint applicants earning up to $250,000 (once eligible, participants will retain access to the deduction even if their income rises).
“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,” read a statement from the Coalition.
“However, the benefit will depend on individual circumstances including the size of a mortgage, interest rates, income, other tax deductions and so forth. By applying only to newly built homes, this policy will boost construction activity, create jobs, and increase housing supply — which is critical at a time when home building has stalled and Labor’s promise to build 1.2 million homes is projected to fall short by at least 400,000 homes.”
Also announced was a boost to the 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
In response to Labor's announcement
These latest changes follow the Albanese Labor Government's announcement that it would provide 5 per cent deposits for first home buyers.
They would also be exempt from paying lenders mortgage insurance (LMI).
“The median home price in Australia today is $820,000. Five per cent of that is $41,000. The last time $41,000 covered the 20 per cent deposit for a median home was 2002. That’s the generational scale of this change,” said O’Neil.
“This means a Sydneysider and first home buyer can purchase a $1 million apartment with a $50,000 deposit with their loan guaranteed by the Albanese Government. It means a Queenslander and first home buyer can purchase an $850,000 home with a $42,500 deposit.”
Also announced was a $10 billion investment to build 100,000 homes, available only to first home buyers, in coordination with state governments.
