Govt moves to ease home burden

Press, 19 August 1981, Page 6

Govt moves to ease home burden

PA Wellington The first home mortgage interest tax-rebate.provistons announced in the Budget have been extended to cover homes bought since April i, 1976, according to legislation introduced into Parliament yesterday. - . The Budget said the rebate would apply to homes bought after April 1, 1977. but the Minister in charge of the Inland Revenue Department (Mr Templeton) said when introducing the Income Tax Amendment Bill that " this would be extended back a year. „ This meant all homes bought in a five-year period would be covered.

The bill aimed to give effect to the Budget’s income tax provisions. • The mortgage interest tax provision would apply from April 1, 1981, and would be an end-of-year rebate of 50 per cent of interest paid during the year, with a maximum rebate of $l6OO. In the case of married couples who were both earning, the rebate would be paid to the principal' incomeearner.

It would not apply if the owner or the spouse had owned or had an interest in any home, anywhere, before. “A taxpayer who buys a home after April 1,1981, will be entitled to claim a rebate for qualifying interest paid during the first five years of ownership.” Mr Templeton said.

“This will mean, depending on the date that the first

home has been purchased, that the rebate will be allowable in six income years, but the over-all maximum fcr those years will be $5000." Mr Templeton said those taxpayers who bought their homes between March 31, 1976, and April 1,1981, would get an income tax rebate “in the income years into which the remainder after April 1, 1981, of the five-year ownership period extends."

The other Budgetary provisions covering personal income tax. family assistance, gifts to charity and the depreciation on motor-cars would be put into law with the bill.

In a companion move, the Government introduced a bill which the Minister of Housing (Mr Quigley) said would “encourage more and more people to save for home ownership?’ The Home Ownership Saving Amendment Bill established the success of previous and existing National Party policy. Mr Quigley said. More than $55 million was in home ownership accounts — a “very substantial measure of support to existing legislation."

The bill removed some of the complexities of the legislation and would make saving for a first home more popular, he said. Labour’s housing spokesman. Mr M. K. Moore (Papanui), said the Opposition welcomed the bill "as far as it went" because it extended legislation originally brought in by his party.

But he said the amendments were only necessary because of inflation created by the Government. ■ "“The truth of the matter is that the average wageearner can save all he earns after tax and still not save enough to keep pace with inflation."

Labour supported provisions including one increasing the amount a person could earn each year. But it wanted to know why under another clause the Minister did not increase the total amount that one saved. -

“If it is good enough because of inflation to increase the amount, you (can) save per year (s3oi)o),that should therefore extend to how much you can save in total ($10,250).” The previous annual maximum was $2OOO. The $10,250 figure had stood since-1976. Mr Moore said.

The Papaiiui member of Parliament said that if National had kept to its 1975 election promises the bill would not have been necessary. “They promised 85 per cent loans on first mortgages. If they kept to that you wouldn’t have to have this kind of bill.” The bill, which was introduced and referred to, the Commerce and Energy Committee. empowered 1981 Budget provisions which "provided additional incentives and make improvements to the home ownership schemes,” Mr Quigley said.

The bill reduces the minimum savings period from three to two years, and leaves the maximum period of five years unchanged. Private savings banks become authorised institutions.

Other amendments include the removal of a restriction which prohibited a withdrawal being made to' acquire a building site. The depositor will be permitted to acquire a dwelling for the occupation of. the depositor and any other person, not only the spouse or dependants. Among the many amending clauses is also one which authorises non-occupancy by the depositor. This caters for people unable to occupy their home from the outset.