Tax Blogs

Get Into Your First Home Sooner

May 26, 2021

The First Home Super Saver Scheme is going to help you buy your first home sooner.

First Home Super Saver Scheme is helping you get your first home faster

How does it work?

You’ll have the option to save your deposit using your super account by creating a second account within your super fund for your home deposit savings.

And guess what?! You pay less tax on your savings if you put the money into your super account instead of a normal savings account.

Here’s an example…

You earn $60,000 and want to put $10,000 of your salary (before-tax) towards your home deposit. If you pay tax on that $10,000 like normal, you’ll be paying around $3,250 in tax.

If you put that $10,000 into the FHSSS instead, you’ll only pay around $1,500 in tax because super contributions are taxed at 15%.

When you withdraw your money, you’ll be taxed at your marginal tax rate, but you get a 30% offset, saving you a bucket load of tax.  

Can I get the FHSSS?

To get access to the FHSSS this must be your first ever property purchase – so you can’t have bought another property, invested, co-invested or purchased land.

Other things you need to know

You need to live in the home for at least 6 months of the first 12 months you own it to avoid tax bills.

You can contribute a maximum of $15,000 in a single year and can only contribute a maximum of $30,000 in total across all years.

Update: Recently announced in the 2021-22 budget you can now contribute up to a maximum of $50,000 in total across all years. $15,000 cap per year still applies (expected to be available by 1 July 2022).

How do I get my money out?

To get your deposit out you must be over 18 and you must use the deposit to buy a home. So, caravans, motor homes, and houseboats are out of the question.

When you’re ready you will need to apply through the ATO to have the funds released.

At tax time, you’ll receive a payment summary for the FHSSS, this needs to be added to your tax return, then when the ATO processes your tax return they will apply the 30% offset to the final result. Easy peasy!

Lastly, if you’re planning on buying vacant land, you need to have a contract that says you’ll be building a home within 12 months of receiving your deposit.

You need to make sure you keep all the info involved in getting the FHSSS, it’s likely the ATO and the banks will want to sight the info before releasing any funds and loans.

Happy Saving,

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