For the first time in Australia, under an elected Dutton Coalition Government, first home buyers will be able to claim a tax deduction on mortgage interest payments for new build homes.
A Dutton Government will also provide a boost to the Home Guarantee Scheme which we established in government and has supported more than 200,000 Australians into their own home.
The First Home Buyer Mortgage Deductibility Scheme and the improvements to the Home Guarantee Scheme are part of a comprehensive policy designed to restore the dream of home ownership.
For generations, owning a home has been a cornerstone of the Australian dream and a symbol of security, stability and pride. Today, obtaining a home has become harder than ever before.
Under Labor's housing crisis, the dream of home ownership has slipped away with soaring mortgages and rents.
To address this, the First Home Buyer Mortgage Deductibility Scheme will provide a tax deduction on interest payments for the first five years of a mortgage, helping first home buyers get a genuine leg-up into the market.
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).
This policy is designed to make housing more accessible by reducing the cost of borrowing, improving loan serviceability, and helping buyers build equity faster.
It provides a direct, tangible benefit in the early and most financially challenging years of home ownership.
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.
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.
Under the 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 (refer to table 1)
- The number of places under the First Home Buyer Guarantee and Regional First Home Buyer Guarantee will be uncapped
The First Home Buyer Mortgage Deductibility scheme is just one part of the most comprehensive housing policy brought to a federal election to date.
It expands on the Coalition's comprehensive strategy to alleviate pressure on the housing market, boost supply, tackle Australia's housing crisis and restore the dream of home ownership.
Key measures include:
- Controlled migration to ease demand - with a two year ban on foreign investors and a reduction in migration from current record levels which is expected to free up over 100,000 homes over 5 years.
- Housing Infrastructure Programme - $5 billion to invest in water, power, sewerage and roads infrastructure needed to swiftly unlock up to 500,000 homes.
- Super Home Buyer Scheme - Providing the choice to use up to $50,000 of your super towards a deposit.
- Changing the rules - Working with financial regulators to change lending rules to help young Australians access a mortgage, this will include reducing the overly cautious serviceability buffer.
- Cutting red tape - allowing builders to get on with the job of building more homes by freezing further changes to the National Construction Code.
- Supporting construction - increasing apprentices and trainees, deregistering the lawless CFMEU and restoring the building watchdog.
- Low interest rates - by delivering a strong economy with lower inflation.
After years of rising rates, unaffordable housing, and inadequate supply under Labor, a Dutton-led Coalition is offering a real solution to make home ownership achievable again.
The Coalition won't accept a situation where a generation of Australians miss out on the opportunities for home ownership that previous generations enjoyed.
Restoring the dream of home ownership is part of our plan to get Australia back on track.
| 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 |
Table 1 - Home Guarantee Scheme Property Caps
