Written by: Maria Papa
The Australian Government has introduced the First Home Super Saver (FHSS) scheme to help Australian save for their first home. From the 1st of July 2017, you can make voluntary concessional (before tax) and non-concessional (after tax) contributions into your super fund to save for your first home.
The contributions and the earnings as calculated by the ATO can be withdrawn from the 1st of July 2018 and used towards the purchase of your first home.
For many first home buyers, the First Home Super Saver Scheme could boost their home savings capacity up to 30% faster, compared with saving through a standard deposit account. This is due to concessional tax treatment and the higher rate of earnings often realised within superannuation funds.
How it works?
Australian first home buyers can boost their savings for a first home by allowing them to build a deposit inside a complying superannuation fund.
Who is eligible to use the FHSS scheme?
How much can you contribute?
First home buyers can make voluntary contributions into their super account up to $15,000 per year. The maximum amount you can contribute to super for a home deposit, using the FHSS, is $30,000. Any super contributions you make must be within your annual contributions caps. For the 2018/2019 financial year, the annual contributions caps are:
What contributions can you make?
Voluntary concessional contributions – this include salary sacrifice amounts or contributions for which a tax deduction has been claimed. Concessional contributions such as salary sacrificed contributions are taxed at 15%.
How will your contributions grow?
At the time of your loan application, the ATO will calculate and apply any earnings that can be released. The deemed rate of earnings on top of your contributions is set to the “Shortfall Interest Charge”. This deemed earnings rate is higher than typical deposit rates currently on offer from financial institutions.
For more information about the First Home Super Scheme, please visit the following webpages.
First Home Super Saver Scheme – ATO website
Originally published 18 February 2019
Here’s a copy of The Complete Guide to First Home Buyers Manual for you to review
Your full financial situation will need to be reviewed prior to acceptance of any offer or product.
MBM Mortgage Pty Ltd trading as Maverick Finance | ABN 28 149 301 084 | Credit Representative 403019 is authorised under Credit License 389328
This website provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.