Published: Jan 29 2020
First Home Super Saver Scheme (FHSSS)
If you’re considering buying your first home, and looking to actively increase your home deposit, then you should start considering taking advantage of the First Home Super Saver Scheme (FHSSS) sooner rather than later.
The FHSSS allows eligible first home buyers to make voluntary super contributions and later withdraw this money to put towards a home deposit.
By saving money through your superannuation fund (rather than a normal savings account), you pay less tax, meaning you’ll be able to reach your savings goal faster.
What are the benefits of the First Home Super Saver Scheme?
The FHSS helps first home buyers save for their deposit faster because concessional contributions (also know as pre-tax contributions) are taxed at 15% instead of your normal tax rate. This means that super contributions made, and later withdrawn, through the FHSSS will be taxed at a significantly lower rate.
Voluntary contributions through the scheme are capped at $15,000 per year, and $30,000 in total. This means you’ll want to start saving at least two years before you intend to buy to take full advantage of the scheme.
If you’re buying your first home with your partner, you could double the amount you save.
How does the FHSSS work?
Here’s an example of how the first home saver scheme could help you increase your deposit (note: this is an estimate only and other factors like Medicare Level and Low-Income Offsets have not been accounted for)
Say you earn $65,000 a year, your take home pay (after tax) is roughly $52,328 per year. If you put $15,000 towards your deposit that year, you are left with approximately $37,328 for all your other expenses.
If you want to take advantage of the First Home Super Saver Scheme, you could make a $15,000 concessional contribution to your superannuation. Because this is contributed pre-tax and therefore taxed at a much lower rate, only $50,000 is taxed at the normal rate. This would mean you are left with approximately $42,203 for all your other expenses for the year.
So, by using the FHSSS to save for your home deposit, instead of a standard savings account, you have approximately an additional $4,875 per year.
Who is eligible for the FHSSS?
- You must be at least 18 years of age
- You must have never owned property in Australia or previously requested funds to be released under the FHSSS
- You intend to live in the property for at least six months within the first 12 months from settlement
How do I apply for the FHSSS?
Speak with your employer to enter into a salary sacrifice arrangement and begin making voluntary super contributions. When you’re ready to withdraw your FHSS amounts, you’ll need to apply to the Government for the funds to be released. Visit the Government’s FHSSS website for more information.