The First Home Super Saver Scheme (FHSSS) is a government scheme made to assist you to buy your first home.
It does this by using voluntary pre-tax Super contributions that can be withdrawn to use as a deposit on your first home.
It’s designed to help you save and buy a home faster.
Here’s an example of how it works:
Josh earns $50,000 year. He’s asked his employer to take voluntary before-tax contributions from his salary and make them to his Super fund, totalling $10,000 per year. This is roughly $833 per month from his before tax pay.
As this money is being taken before tax, it moves him to a lower tax category and his take home pay is only reduced by $533 per month or $6,400 per year, but his Super is going up by $10,000 per year.
Based on calculations from the First Home Super Saver Scheme calculator, Josh will have $25,608 available for deposit after 3 years of saving. This is $6,089 more than is he’d been saving in a regular savings account.
(Note: The contributions are taxed to 15% in your Super fund – which is more than likely less than your marginal tax rate.)
Here’s why the FHSSS is a great idea.
- Speeds up your savings – due to tax savings
- Tax benefits – favourable tax treatment on eligible funds that are withdrawn from your Super.
- Meets genuine savings criteria – makes you look good to the mortgage lender
- Win-win if you don’t use the funds – if something changes your plans and you don’t end up using the savings for a home deposit, you lose nothing because it just stays in your Super account and bolsters up your retirement fund.
To apply for the FHSSS you cannot have owned a property in Australia in the past, you need to be over 18 years of age, planning to live in the property for at least 6 months within the first 12 months of owning it and have not used the FHSSS before. Eligibility is based on individuals which means that couples, siblings and friends can access their own FHSSS contributions to purchase the same property and if someone has previously owned a home, it will not stop anyone else who is eligible from applying.
There are limitations – the maximum voluntary contribution is $15K per financial year and up to a maximum of $30K in total, and the money must be used to buy a habitable home – not vacant land, a houseboat or motorhome.
If this sounds like something that would help you, a friend or a family member, we’d be happy to talk through details and help with everything from set up to withdrawal.
Get in touch to arrange a time to discuss your plans.