How to use the First Home Super Saver scheme

The First Home Super Saver scheme allows first home buyers to save money inside their superannuation fund.

Couple getting keys to their first home

What are the benefits of the First Home Super Saver scheme?

The Australian Government offers a helping hand to first home buyers via the First Home Super Saver (FHSS) scheme. Introduced in the Federal Budget 2017-18, the scheme aims to reduce pressure on housing affordability and give first home buyers a hand getting into the property market.

The main advantage of the FHSSS is that it can provide a tax-effective way for first-home buyers to save for their deposit. The scheme allows first home buyers to save money inside their superannuation fund, up to approved maximum limits. These contributions may be taxed at a lower rate than normal income, meaning that savers can potentially build up a larger deposit more quickly.

Another benefit of the FHSSS is that savers who make eligible contributions into their superannuation fund under the scheme can withdraw those contributions sooner than they would normally be able to. Under the scheme, savers can apply to withdraw their contributions, along with any associated earnings, once they have entered into a contract to purchase their first home. 

How the First Home Super Saver Scheme works

To participate in the First Home Super Saver Scheme, individuals must be over 18 years of age and have never owned property in Australia. They must also meet the eligibility criteria for making contributions to their superannuation fund. This includes being an Australian resident for tax purposes. Contributions are limited to $15,000 per year, up to a maximum total of $50,000 in contributions across all years. Other limits and caps apply, particularly in the case of concessional contributions (such as contributions made through salary sacrifice). It's important to check if you are eligible for the FHSSS before you start making contributions to your superannuation fund.

Once you have made eligible contributions to your  superannuation fund under the FHSSS, you can apply to have those contributions released. Importantly, superannuation guarantee contributions made by your employer, or spouse contributions, cannot be released under the FHSS scheme. The release of funds is subject to approval by the Australian Taxation Office (ATO). It's important not to sign any property contract before applying to the ATO for an FHSSS determination. The FHSSS determination will let you know the maximum amount which you can withdraw. If approved, you will need to notify the ATO once you sign your purchase contract, allowing enough time for your funds to be released.

The First Home Super Saver Scheme is a valuable initiative to investigate for first-home buyers looking to purchase their first property. By providing a tax-effective way to save for a home deposit, the scheme can help individuals build up a larger deposit more quickly. If you are a first-home buyer and are looking to take advantage of the FHSSS, it is important to speak to your accountant or a financial advisor to ensure that you meet the eligibility criteria and understand how the scheme works.

Find out all you need to know about your eligibility for the scheme and how it works via the Australian Taxation Office website. 

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