More Affordable Homes
First home buyer mortgage deductibility.The Coalition is determined to restore the dream of home ownership.
Under Labor, the aspiration of home ownership has become out of reach and building approvals have fallen to their lowest level in over a decade.
The First Home Buyer Mortgage Deductibility Scheme will support first home buyers in the early years of their mortgage, making it easier to enter the housing market, and will also boost the number of new homes built across the country.
A Dutton Coalition Government will allow first home buyers who purchase a new property to live in, to claim a tax deduction for the interest payments on the first $650,000 of their mortgage for the first five years of their mortgage.
Frequently asked questions
Who is eligible?
Our new policy will be available for Australian citizens purchasing their first home to live in, who are earning up to $175,000 for individuals, and $250,000 for joint applicants.
There would be no limit on the purchase price of the home or amount of the mortgage.
How much is this worth to me?
The benefit to individuals will depend on their circumstances, including the size of their mortgage, the interest rate, whether a portion of their mortgage is offset, their income, and how the mortgage is apportioned.
For example, a first home buyer with a taxable income of $120,000 with a $650,000 mortgage at 6.1% interest, will receive a benefit of around $12,000 a year.
The benefit for a mortgage holder will be lower if the deduction reduces their taxable income into a lower tax bracket.
Can I buy any home?
To access the Scheme you must be purchasing newly built homes – homes that have yet to be occupied. This will include off-the-plan apartments.
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. This means that for a mortgage in excess of $650,000, the deduction will be allowed for interest costs incurred on the first $650,000 of the mortgage.
What happens if I move out before five years?
You can only claim the deduction while the home is your principal place of residence – for up to five years. If you move out before five years, then you will cease to be able to claim the deduction.
Why is this only for new homes?
By ensuring that this only goes to new builds, we can ensure that this policy boosts housing supply for the market, making it easier for first home buyers at the same time as encouraging supply.
How will the policy work for joint applicants?
The Scheme allows for joint applications, but only those who are a first home owner will be able to claim the tax deduction, for their portion of the mortgage. So if you are purchasing your first home new build with your partner, and they have already owned property, only you will be able to claim the deduction, and only for your portion of the mortgage.
Joint applicants who are both eligible for the deduction will be able to claim a deduction according to their portion of the mortgage.
The maximum benefit to joint applicants would not exceed the maximum benefit available to an individual at the same income level, since the $650,000 limit for the Scheme is based on the mortgage. Joint applicants will share the benefit of the Scheme depending on their income levels and how they choose to apportion their mortgage.
How will this work with other Commonwealth and state government first home buyer schemes?
This will work alongside other state and Commonwealth schemes, including the Coalition’s First Home Buyer Guarantee, and our plan to allow Australians to access up to $50,000 of their super to help save for a deposit.
When does it start?
We will introduce legislation to establish the Scheme in our first 100 days in office. The Scheme will apply for the 2025-26 financial year.
Does the size of my deposit impact my eligibility?
No, eligibility is based on income only.
Does this apply for interest only loans?
No, eligibility is limited to principal and interest loans only.
How long will it last?
This is a permanent change to our tax system, to permanently encourage additional housing supply and make it easier for Australian first home buyers to afford a home.
What else are you doing to help restore the dream of home ownership for Australians?
The First Home Buyer Mortgage Deductibility Scheme is part of a suite of measures designed to restore the dream of home ownership.
We will also expand the eligibility for the Coalition’s successful Home Guarantee Scheme, which has supported 200,000 Australians into their first home.
The Coalition’s Home Guarantee Scheme helped 1 in 3 first home buyers to purchase or build their own home in 2023-24.
A Dutton Government will increase the income caps for the Scheme, update the property price caps to better reflect the current market, and remove caps on the number of people who can access the First Home Buyer Guarantee and Regional First Home Buyer Guarantee each year.
Across the three streams of the Scheme we will increase the income test to $175,000 for single and $250,000 for joint applicants.
The income test is currently $125,000 for individuals and $200,000 for joint applicants.
The Coalition will also make the Regional First Home Buyer Guarantee and the Family Home Guarantee ongoing.
New Price Caps:
| Region | Current property | New property |
|---|---|---|
| NSW – capital city/regional centre | $900,000 | $1,500,000 |
| NSW – other | $750,000 | $800,000 |
| VIC capital city/regional centre | $800,000 | $950,000 |
| VIC – other | $650,000 | $650,000 |
| QLD – capital city/regional centre | $700,000 | $1,000,000 |
| QLD – other | $550,000 | $700,000 |
| WA – capital city | $600,000 | $850,000 |
| WA – other | $450,000 | $600,000 |
| SA – capital city | $600,000 | $900,000 |
| SA – other | $450,000 | $500,000 |
| TAS – capital city | $600,000 | $700,000 |
| TAS – other | $450,000 | $550,000 |
| ACT | $750,000 | $1,000,000 |
| NT | $600,000 | $600,000 |
Our new First Home Buyer Mortgage Deductibility is part of the Coalition’s comprehensive plan to address Labor’s housing supply crisis:
- Reining in wasteful spending that fuels inflation. With low inflation, we will reduce pressure on interest rates.
- Deliver $5 billion to the Housing Infrastructure Programme to fund essential infrastructure like water, sewerage and power to quickly unlock up to 500,000 new homes.
- Reduce Labor’s record migration program to sustainable levels, to free up almost 40,000 extra homes in the first year, and well over 100,000 homes in the next 5 years.
- Ban foreign investors and temporary residents from purchasing existing homes for two years.
- Allow first home buyers and older women to access up to $50,000 from their super toward a deposit for their first home.
- Provide SMEs with $12,000 to support putting on a new trainee or apprentice, with a focus on building and construction.
- Work with financial regulators to change lending rules to help young Australians access a mortgage, this will include reducing the overly cautious serviceability buffer.
- Stop the growth in red and green tape to allow builders to get on with the job of building more homes by freezing further changes to the National Construction Code for 10 years.
- Restore the Australian Building and Construction Commission to tackle union corruption that has contributed to driving up building costs by up to 30 per cent.
What else is the Coalition doing to support Australians with the cost of living?
A Dutton Coalition Government will deliver meaningful cost of living relief for Australians by:
- Reducing the fuel excise by 25 cents per litre to provide immediate relief. A household with two cars filling up once a week will save around $1,500 over 12 months.
- Delivering a Cost of Living Tax Offset to provide low and middle income earners a benefit of up to $1,200.
- Delivering cheaper medicines and record Medicare funding to ensure all Australians can afford to see a doctor.
- Lowering energy costs through a balanced energy mix, including more renewables and more gas. Our National Gas Plan will make more gas available for Australian businesses and consumers.
- Providing tax relief to small businesses, including extending the instant asset write-off, and introducing a deduction for business related meal expenses.