First Home Super Saver Scheme.

The property market is always a hot topic for Australians and many of us are well aware of the challenges faced by those trying make their first property purchase.

Saving the minimum 10% deposit can seem like a mammoth task – even more so if you want the 20% that will mean avoiding paying for mortgage insurance.

Parliament has however recently passed legislation that may be worth considering if you’re looking for ways to bolster your home deposit savings.

The First Home Super Saver Scheme is a new initiative that Government believes will help first home buyers to enter the market.

The scheme enables you to make voluntary contributions to your superannuation account - these are extra contributions over and above what your employer pays on your behalf - and then withdraw these extra contributions, along with any earnings, for the purposes of purchasing your first home.

Why wouldn’t you just put any extra money you have into a savings account?

The scheme is designed to help you save more towards your first home by paying less tax on money that you earn and intend to use for the purchase of your first property. 
It’s important to understand that if you don’t pay tax or only a small amount of tax, this scheme is not likely to benefit you.

The idea is that you make your extra contributions to your super “pre-tax” (also known as salary sacrifice).  This is something you can easily set up with your employer.

In addition, it may be the case that money in your superannuation account will perform better than money left in a savings account.  Particularly during this period of low interest rates.

Here are the key aspects of the scheme:

  1. You can apply for the release of voluntary contributions up to a maximum of $15,000 from any one financial year and $30,000 in total across all years.
  2. You cannot have previously owned property in Australia.
  3. You must not have previously released FHSS funds.
  4. You must either live or intend to live in the premises you are buying as soon as practicable.
  5. You must intend to live in the property for at least six months of the first 12 months you own it, after it is practical to move in.
  6. The normal superannuation contributions limits apply – the maximum pre-tax contributions (by yourself and your employee combined) is $25,000.
  7. These contributions limits apply to an individual.  Couples may make their individual contributions and apply separately to have their voluntary contributions released to purchase the one property.  

This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this article.