Tax breaks for first homebuyers

Financial services group AMP Banking has moved to assist Australians buying their first house with its First Home Saver Accounts (FHSAs) offering, which has an introductory variable interest rate of 8 per cent per annum.

The offer is part of the Federal Government’s commitment to help Australians save for the purchase of their first home through a combination of government contributions and low taxes.

Described as a ‘tax effective superannuation style’ investment account, FHSA will be available through AMP Banking directly and through AMP financial planners from October 1, 2008.

AMP Banking managing director Michael Lawrence said the offer was one of the first that takes advantage of the Federal Government’s initiative and provides an opportunity for Australians to build their wealth over the medium term with a view to purchasing their first home.

According to Lawrence, the accounts will only attract 15 per cent tax on earnings, withdrawals made are tax free, and the Federal Government will contribute 17 per cent on the first $5,000 of individual contributions made each year.

There is a 7 per cent per annum variable base interest rate for all deposit amounts and a $75,000 contribution cap on the overall account balance, indexed over time.

“The account is also a great opportunity for parents or grandparents to sign up their children to help them save for their first home — it’s never too early to start,” Lawrence said.

“This will be the first step that some Australians take towards preparing and planning for their future financial needs.”