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How to save for a first home in super

Published - 25 January 2024

Are you looking to buy your first home? Maybe you have adult children and are wondering how you can help them get their first property. With rising interest rates and increasing cost of living, it’s getting harder to save a deposit. Did you know you can save for your first home using super?

What is the FHSS Scheme?

The First Home Super Saver (FHSS) Scheme is a government program that helps eligible first home buyers save towards their deposit inside their super. Because of the favourable tax treatment applied to super, it may help you save your deposit sooner. Here’s a quick guide to the basics.

Who is eligible?

To be eligible, you must be at least 18 years old, be an Australian citizen or permanent resident and have never owned property before (unless you lost your first property because of special circumstances or divorce).

How to access the FHSS Scheme

Voluntary contributions made to your super can later be withdrawn for your deposit. This means savings you choose to pay into your super, whether after-tax (non-concessional) or before-tax (concessional), such as salary sacrifice contributions. It’s worth noting that the scheme was introduced from 1 July 2017. If you have made voluntary contributions to your super since that date, they may count toward your deposit.

How much can you add and withdraw?

You can add up to $15,000 toward the scheme each financial year, up to a total of $50,000. These funds are then taken out when you’re ready to buy. Buying a house with someone else? If eligible, they can also add to their super and take out the $50,000 for a combined deposit of up to $100,000.

What type of home can you buy?

You can purchase a home using the FHSS Scheme provided you intend to live in the property for at least 6 months of the first 12 months you own it, after it’s practical to move in. There are exceptions to the type of residence you can purchase. Caravans, houseboats, mobile homes and vacant land are not included. However, if you purchase vacant land, the contract you enter into to construct your home may meet the requirements of the scheme.

Is the FHSS Scheme right for you?

Deciding if the FHSS Scheme is right for you will depend on things like when you’re looking to buy, your income and your normal tax rate, so it’s worth considering the pros and cons.

A benefit worth exploring is to use salary sacrifice to add to your FHSS Scheme money in super. You’ll generally pay 15% tax on these contributions instead of your normal income tax rate (up to 47% including 2% Medicare levy), helping you save your deposit sooner. Whilst these types of contributions are taxed when taken out, a 30% tax offset gives an overall benefit.

The scheme is administered by the Australian Tax Office (ATO), so you may not be able to act quickly if you find a home. However, the timelines and the application process are manageable. Our website explains the FHSS Scheme in more detail and includes a step-by-step guide on how to apply, useful links and some great FAQs.