2017 BUDGET SEASON DOWNSIZING INITIATIVES REPORT CARD

This $300,000 contribution will be exempt from the existing age and work tests for people aged over 65.

This would mean, for instance, that someone who is aged over 75 who is currently not allowed to make voluntary superannuation contributions will now be able to do this when selling the family home.

Similarly, currently if you are aged 65 to 74, you must have worked for at least 40 hours over 30 consecutive days in the financial year to be allowed to make a voluntary contribution. That rule will also not apply for contributions from the proceeds of the family home.

For starters, the initiative will not begin until 1 July 2018. Secondly, you need to have owned the home as a principal place of residence for ten years, which seems like a very long time.

Thirdly, there are many dreaded checks and balances and oodles of red tape. For instance, superannuation balance changes as a result of a family home sale contribution will still affect a person’s aged pension asset test.

Impacts on the aged pension asset test therefore remain a major barrier to downsizing.

The former Rudd Government recognised this when it announced, as part of the 2013-14 budget, it would be allowing downsizers to keep up to $200,000 of the value of their sold home out of the pension assets test. However, the incoming Abbott Government scrapped this measure just one year later in Joe Hockey’s famous austerity 2014-15 budget, citing budgetary pressures.

In addition, there doesn’t appear to be anything else in the 2017-18 budget which specifically seeks to help senior Australians to downsize.

There are of course a wide range of housing affordability measures, including working with State and Territory governments to set housing supply targets and facilitate planning and zoning reform under a new National Housing and Homelessness Agreement.

However, the budget fell well short of a comprehensive plan to support downsizing.

In December 2016, the government ceased offering a separate complementary scheme offering a stamp duty concession scheme for non-pensioners aged over 60.

The budget though does get a C, not a D, because at least the government has retained some measures to support downsizing.

However, the government’s announced stamp duty exemptions were all targeted at first home buyers, with no relief offered to downsizers or seniors in general.

This is somewhat disappointing, particularly given that NSW for a short period did have what was considered one of the most progressive downsizing stamp duty policies in Australia.

In 2010, the Keneally government announced that people aged over 65 would pay no stamp duty to buy a newly-constructed home valued up to $650,000. This exemption was introduced to drive housing construction in the post-global financial crisis era.

The incoming O’Farrell Government extended the concession for a further year and reduced the eligibility age to 55. But the system ceased in July 2012 and the government has not revived it.

The scheme is not means tested but eligibility ceases if the dutiable value of the home or land at the date of the conveyance exceeds $750 000 and $385 000 respectively.

Alternatively, the government also continued to support:

·       A stamp duty Principal Place of Residence Rebate of up to $7,000 to persons purchasing a new home or land on which to build a home (you can’t claim both the concession above and this rebate at the same time); and

·       The Home Improvement Scheme, which allows any owner-occupier to access up to $4,000 to undertake improvements on their existing home

One of these recommendations was to “review the current Queensland Government’s State Planning Policy to support planning for age-friendly communities including affordable and adaptable housing, affordable living, and access to services and amenities.”

The government has continued an existing program which gives stamp duty concessions to anyone who buys a home as a principal place of residence.

•       An extension of the off-the-plan stamp duty concession to 30 June 2018, allowing eligible applicants to benefit from up to $15,500 in stamp duty relief on off-the-plan apartment purchases.

•       The introduction of a $10,000 pre-construction grant for eligible off-the-plan apartment contracts entered into between 22 June 2017 and 30 September 2017, where construction is yet to commence.

•       The introduction of a five-year land tax exemption for investors purchasing off-the-plan apartments, for contracts entered into between 22 June 2017 and 30 June 2018.

But it did announce it would continue stamp duty concessions which are available for off-the-plan purchasers. These concessions are available for purchases up to $550,000 for people who are using the home as their principal place of residence. The government announced it had removed investors from this scheme.

Like NSW, it has also announced a strong focus on boosting housing supply in both greenfield and existing suburban areas, although there is no reference to any of this supply being specifically suitable for downsizing seniors.

It also announced an interesting shared equity scheme for housing, but this is only targeted at first home buyers and low-income salary earning households and therefore is not suitable for downsizers.

There was a general announcement that stamp duty will only have to be paid on the value of land for eligible house and land packages, providing stamp duty relief of around $7,500 on the average cost of a standard “off the plan” house and land purchase.

It also announced measures to boost housing supply, through updating planning regulations.