- While you cannot simply withdraw your existing compulsory employer super contributions, you can make voluntary contributions (up to $15,000 per year and $50,000 in total) specifically to save for your first home
- It is a good idea to use the FHSS scheme because salary-sacrificed contributions are taxed at a flat 15% rather than your higher marginal income tax rate, which could potentially boost your savings by thousands of dollars
- To access the funds, you must apply for a “determination” from the ATO before you sign a property contract, ensuring the money is released to you for a residential home you intend to live in for at least six months
From time to time, there are discussions in the media about the idea of giving Australians – particularly first-home buyers – access to their superannuation so they can buy a property.
The Coalition went to the 2022 federal election with a policy that would let first-home buyers withdraw up to $50,000 from their super (up to a maximum 40% of their super balance) so they could get on the property ladder. However, the Coalition lost the election and the policy never became law.
So, as things currently stand, you can’t withdraw your super savings to buy a property.
However, if you’re a first home buyer, you can use your superannuation account as a savings vehicle, through a scheme known as First Home Super Saver (FHSS).
How to use your superannuation as a savings tool to buy a house
- You can save some or all of your deposit by making additional contributions into your superannuation. These funds would be earmarked for later use as a property deposit and would be taxed at only 15%.
- When you want to buy a property, you can withdraw up to $15,000 of your voluntary contributions from any one financial year, up to a total of $50,000 across multiple years, plus associated earnings.
Using the FHSS can make it easier to save a deposit on your first home compared to if you had to save all of the money outside superannuation, for two reasons:
- The money would be taxed at only 15% before it went into your superannuation. By contrast, marginal tax rates for money paid into your regular bank account would be 16% if your income was over $18,200, 30% if it was over $45,000, 37% if it was over $135,000 and 45% if it was over $190,000.
- You wouldn’t be able to spend these savings on gadgets, holidays or anything else – because it would be locked in your superannuation and you can only access it to buy a home.
The FHSS has strict conditions of use, so do your research before using it.
Reach out to your Loan Market broker for more advice around using the FHSS or to set up a plan to purchase your first home.
