The Coalition has announced a new policy allowing first-home buyers to deduct mortgage interest payments from their taxable income.
This initiative, unveiled by Opposition Leader Peter Dutton during the Coalition’s 2025 federal election campaign launch, is designed to make homeownership more accessible for young Australians while boosting housing supply and construction activity.
The First Home Buyer Mortgage Deductibility Scheme
The proposed scheme targets first-time buyers of newly built homes, enabling them to claim tax deductions on the interest paid on up to $650,000 of their mortgage.
This benefit will be available for the first five years of home ownership and is means-tested, with income caps set at $175,000 for individuals and $250,000 for couples.
For an average family purchasing a home under this scheme, the annual tax savings could reach approximately $11,000, or $55,000 over five years. By reducing borrowing costs and improving loan serviceability, the policy aims to alleviate financial pressure during the critical early years of home ownership.
Addressing Housing Supply Challenges
The Coalition’s plan not only provides tax relief but also addresses Australia’s housing supply issues. By focusing on newly built homes, the policy is expected to stimulate construction activity and create jobs in the building sector.
This aligns with the Coalition’s broader housing strategy, which includes a $5 billion Housing Infrastructure Programme aimed at unlocking 500,000 new homes through investments in essential infrastructure such as roads and utilities.
Additionally, the Coalition has pledged to cut red tape in the construction industry and enhance workforce capacity by increasing apprenticeships and deregulating industry practices. These measures aim to ensure that housing supply keeps pace with demand, particularly in urban areas where affordability remains a significant concern.
A Broader Vision for Housing Affordability
The mortgage deductibility scheme is part of a comprehensive housing policy framework proposed by the Coalition. Key components of this framework include:
- Allowing first-home buyers to access up to $50,000 from their superannuation for a deposit.
- Implementing a two-year ban on foreign property investors to ease demand pressures.
- Reforming lending rules to make it easier for young Australians to secure mortgages.
- Expanding the Home Guarantee Scheme by raising income caps and increasing property price limits.
These initiatives are designed to restore balance in the housing market while ensuring that future generations can achieve the dream of home ownership—a cornerstone of Australian life.
Election Spotlight on Housing Policies
Housing affordability has become a central issue in the lead-up to Australia’s federal election on May 3, 2025. The Labor government, led by Prime Minister Anthony Albanese, has also unveiled ambitious housing policies, including a $10 billion plan to build 100,000 homes exclusively for first-time buyers and expanding its First Home Guarantee Scheme.
While both parties have pledged significant resources toward solving Australia’s housing crisis, their approaches differ fundamentally. Labour emphasizes direct government intervention through large-scale construction projects and land releases, while the Coalition focuses on tax incentives and private-sector collaboration.