The First Home Super Saver Scheme allows first home buyers to make voluntary contributions to their super fund and later withdraw those contributions (plus associated earnings) to use as a deposit. The tax advantages of super - particularly the 15% tax rate on concessional contributions versus your marginal tax rate on other savings - can make your deposit grow faster.
Concessional (before-tax) contributions are capped at $15,000 per financial year under the FHSSS, with a total lifetime cap of $50,000 across all years. You can also contribute non-concessional (after-tax) amounts, but these do not receive the same tax benefit. The earnings on your contributions while inside super are also included in the amount you can withdraw.
The scheme was introduced by the Australian government and is administered by the ATO. It applies to all APRA-regulated super funds and most self-managed super funds (SMSFs) that meet the eligibility criteria.
To use the FHSSS you must be 18 years or older, you must never have previously owned residential property in Australia, and you must intend to live in the property as your principal place of residence for at least six months within the first 12 months of owning it.
Each individual in a couple can access their own FHSSS savings. If both partners have been making voluntary super contributions, they can both use the scheme for the same purchase - potentially combining up to $100,000 toward a deposit.
The property you purchase must be a dwelling - house, apartment, or townhouse - in Australia. Vacant land is not eligible unless you are going to build on it.
You can withdraw up to $15,000 of eligible voluntary contributions per financial year, with a total cap of $50,000 across all financial years combined. The actual amount released will also include associated earnings calculated by the ATO using a deemed rate of return.
The contributions must have been made on or after 1 July 2017 to be eligible. Contributions made before that date do not qualify, regardless of how long they have been in the fund.
The process happens in two stages. First, before you sign a contract, you apply to the ATO for an FHSSS determination. This tells you the maximum amount you can release. The determination does not commit you to anything - it is an assessment of your eligibility and maximum amount.
Once you have signed a contract to purchase or build a home, you request a release of the funds through the ATO's myGov portal. The ATO then instructs your super fund to release the funds and pays you the after-tax amount. This process typically takes 15 to 25 business days, so you need to plan ahead and ensure your settlement date gives enough time.
You must use the released funds to purchase a home within 12 months of release, or you will face a tax penalty or need to recontribute to super.
The main advantage is the tax saving on contributions. If you earn $80,000 per year and salary sacrifice $15,000 into super for the FHSSS, you pay 15% tax on those contributions instead of your marginal rate of 32.5%. The net benefit can be $2,500 or more per year compared with saving the same amount in a bank account.
The limitations are worth understanding. You cannot access employer contributions - only voluntary contributions you have made. The $50,000 lifetime cap means the scheme works best when you start saving early and consistently. The process involves the ATO and takes several weeks, which requires planning around your settlement timeline. And the scheme is only available for your first home - if you have owned property before, you cannot use it.
The FHSSS works well alongside other first home buyer schemes such as the First Home Guarantee (which allows you to buy with a 5% deposit without LMI) and the First Home Owner Grant in South Australia. A broker can help you understand which combination of schemes you are eligible for.
Jason and Steve help first home buyers in Adelaide navigate all the available schemes - FHSSS, First Home Guarantee, and the SA First Home Owner Grant. Free advice, no obligation.
The information on this page is general in nature and does not constitute financial advice. Given Finance Pty Ltd (t/a Lendology) ACN 624 144 501 is authorised under LMG Broker Services Pty Ltd ACL 517192. FHSSS eligibility and tax treatment are subject to ATO assessment. Consider seeking independent financial and taxation advice before making contributions.