Can you use super to buy your first home?
19 February 2019
Buying your first home in Australia’s tough property market can be quite the challenge. Fortunately, the Australian Government has introduced a way to help save for your deposit: the First Home Super Saver (FHSS) scheme.
So what exactly is the First Home Super Saver scheme?
If you’re eligible, you can save for your first home within your super fund by making additional before-tax contributions (for example, salary sacrifice) and/or after-tax contributions (for example, contributions you make using your take-home pay).
First home buyers can take advantage of the concessional tax arrangement and any associated investment earnings within super.
The benefit of saving through your super is that any concessional contributions and all investment earnings are taxed at 15% instead of your personal marginal tax rate.
Are you eligible?
To qualify for the FHSS scheme, you need to:
- be at least 18 years old at the time of your savings withdrawal
- have never owned property in Australia (some exemptions may apply)
- have not previously received an FHSS scheme payment.
Everyone is assessed on an individual basis. Find out more about the eligibility criteria.
How can you build your savings?
You can start contributing to your super fund at any age, but you have to be over 18 to request a release of your savings under the scheme. There are two main ways to make contributions to your super:
- salary sacrifice contributions through your employer
- voluntary personal super contributions.
How can you withdraw your super savings?
You can release your savings as part of the FHSS scheme by making a request to the Commissioner of Taxation. Find out more about applying to release your savings.
Once you have permission to withdraw you’ll be able to claim:
- 100% of eligible after-tax personal contributions
- 85% of eligible salary sacrifice (before-tax) contributions
- associated (or deemed) investment earnings calculated on these contributions.
You must use the funds to purchase your first home within 12 months of receiving the money. If this becomes an issue, you have the options to apply for a further 12-month extension, recontribute the money to your super or keep it and pay 20% tax on the full amount.
Some things to be aware of under the FHSS scheme:
- Any super contributions you make will also count as part of your normal contributions cap.
- In the year that you release your contributions for your home purchase, you must declare the amount on your tax return, which will impact your tax for that year.
- You can only apply to withdraw a maximum of $15,000 per financial year of your eligible voluntary contributions, up to a total of $30,000 across all years.
Want more information?
Live chat with us online or call 1300 547 873 to speak to Member Services or your LGS financial planner.