First Home Super Saver scheme
Saving a deposit for your first home can be hard work, but the First Home Super Saver (FHSS) scheme could give you a helping hand
Benefits
The FHSS scheme helps you save for your first home by putting extra money into your super. Because of the special tax treatment super gets, you can grow your deposit faster.
How it works
You can save for your deposit by making voluntary contributions to your super. You can withdraw up to $15,000 of your contributions per year, or up to $50,000 in total plus any earnings when you're ready to buy.
You’ll need keep your eye on the contribution caps so you’re not paying extra tax.
Any super that your employer is obliged to pay or spouse contributions can’t be used – only the extra voluntary contributions you’ve made since 1 July 2017.
Case study
Anika is 30 and wants to stop renting
She decides to save for a home deposit using her super.
She earns $80,000pa and decides to contribute $10,000 each year from her pre-tax salary into her super. This type of contribution is taxed at 15%, so each year $1,500 was removed for tax by her super fund and $8,500 went towards her FHSS scheme savings.
Looking forward, Anika turns 35 and has found the perfect place to buy.
She can withdraw her savings in super which is made up of the $42,500 she contributed, and deemed earnings determined by the ATO over the past 5 years. Using the FHSS scheme she has managed to save $49,188*.
If she had built her deposit in a savings account outside of super, Anika’s $10,000 would have been taxed at the marginal rate of 32.5% leaving her with $6,750 per year. After five years she would have saved $36,716*.
Five years into the future, Anika has managed to save an additional $12,472* by using the FHSS scheme.
Am I eligible?
The FHSS scheme is generally available to those who are over 18 who are yet to own a property in Australia.
You just need to make extra before or after-tax contributions into your super account to start saving.
Ready to buy?
Well done! You've saved hard and you're ready to buy your first place.
To withdraw the money from your super account, you'll need to apply to the ATO.
Once you withdraw your deposit, you’ll need to sign a contract of purchase or construct a home within 12 months, otherwise you may be liable for FHSS tax.
For details, visit the ATO website.
*Assumptions: Based on a salary of $80,000pa, with $708.33 salary sacrificed monthly for 5 years and a deemed earnings rate of 6.9%. When the FHSS scheme funds are released this will need to be included on Anika’s tax return. Savings outside of super assume a monthly deposit of $562.50, a savings interest rate of 5% p.a. and does not include the medicare levy. Elena earns and contributes the same amount to FHSS scheme as Anika. There is no allowance for inflation. This example is for illustrative purposes only and is not intended to provide a forecast or guarantee on outcome.
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