Using your super to buy your first home

The Australian Government has introduced the First Home Super Saver (FHSS) scheme to help Australians 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The contributions and the earnings as calculated by the ATO can be withdrawn from the 1st of July 2018 and used towards the purchase of your first home.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 most first home buyers, the FHSS scheme could boost savings up to 30% faster, compared with saving through a standard deposit account. This is due to the concessional tax treatment and the higher rate of earnings often realised within superannuation. 

How it works

Australian first home buyers can boost their savings for a first home by allowing them to build a deposit inside superannuation.  

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 FHSS before

• You must intend to live in the home you purchase with money saved in the FHSS

• You would have to occupy the premises for at least 6 months in the year after purchase

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%

• Voluntary non-concessional contributions that you made, these are made after tax or if a tax deduction has not been claimed.  

Things to look out for

• Check that your nominated super fund will release the money. This is because FHSS scheme contributions may not be released from defined benefit interests or constitutionally protected funds. 

• Ask your super fund about any fees, charges and insurance implications that may apply.

• You are eligible if you have never owned a property in Australia – this includes an investment property, commercial property, a lease of land in Australia or a company title interest in land in Australia.

• You can apply for a release only once. Once you have requested a release, you can’t request another one

• Make sure FHSS is right for you. Speak to your superannuation to find out if the FHSS is right for you.

• Make sure you do your research before making a decision in participating in the FHSSS

• The ATO, not your super fund, will decide what counts towards the FHSS.

Image: Marion Michele | Unsplash