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Axe falls on first home buyer saving scheme

22 May 14

What was the First Home Saver Account scheme?

The scheme was designed to assist people in saving for their first property by giving them a designated account to deposit money in.

Would-be buyers had to save at least $1,000 a year for four years, either consecutive or non-consecutive, before any money could be withdrawn.

Maximum account balances were capped at $90,000 - once this level had been reached, only interest and earnings could be added to the amount.

Anyone who was able to purchase their first property before the four-year period ended could withdraw the money, but no further deposits could consequently be made.

One of the biggest incentives was that the government would make a 17 per cent contribution on the first $6,000 deposited each financial year.

What now?

Any account opened after 19:30 on May 13 will no longer be entitled to the government contribution - existing savers won't receive any more payments after the current financial year.

First home saver accounts will be abolished on July 1 2015 along with all tax and security concessions and restrictions on withdrawals.

The Real Estate Institute of Australia's President Peter Bushby responded to the announcement, saying the scheme would be missed by those hoping to seek real estate advice to get onto the property ladder.

"We would like to have seen the scheme reviewed and improved rather than simply thrown on the scrap heap because of an initial low uptake.

"With home ownership in Australia declining and first home buyers finding it increasing difficult to enter the housing market, this will not help the situation," he commented..

First home buyers are therefore encouraged to look into alternative schemes to assist them in building a deposit for their ideal home.