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The contributions and the earnings as calculated by the ATO can be withdrawn from the 1st of July 2018 and used towards the purchase of your first home.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 realized 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?
- You are aged 18 years or older
- You have never owned a property before in Australia
- You have not used the FHSSS before
- You must intend to live in the home you purchase with money saved in the FHSSS
- You would have to occupy the premises for at least 6 months in the year after purchase
Would you like to know how the first home super saver scheme can help you purchase your first home sooner?
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:
- Concessional (before tax) contributions cap: $25,000
- Non-concessional (after-tax) contributions cap: $100,000
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