What is the First Home Super Saver scheme?

01 August 2018

Buying a house as a millennial can be challenging. Fortunately, the Australian Government has created a new way to save for your deposit: The First Home Super Saver (FHSS) scheme.

Buying a house as a millennial in Australia's tough property market can be challenging to say the least. Fortunately, the government has brought in a new way for you to save for that ever elusive deposit.

As of July 2017, you can now use your super fund to save for your first home purchase. So what exactly is the First Home Super Saver (FHSS) scheme and how can you use your super for a housing deposit?

What is the First Home Super Saver scheme?

In response to the need for younger super savers to get on the property ladder, the 2017 Federal Budget introduced the First Home Super Saver (FHSS) scheme. The scheme works by allowing eligible members to save for a first home within their superannuation fund. It allows first home buyers to combine their savings plans and also take advantage of the concessional tax arrangement within super.

The FHSS scheme will allow voluntary contributions to be withdrawn from super funds from 1 July 2018 onwards.

The First Home Super Saver scheme is an initiative to help young Australians buy their first home.

Who is eligible?

The FHSS scheme is accessible to anyone who adheres to the Australian Government's eligibility criteria. To access the scheme you must satisfy all of these requirements:

  1. You do not intend to request to withdraw your contributions until you are over 18
  2. You have never owned an Australian property. This includes vacant land, investment properties, company title interest on land and leased land. However, this can be overridden if you are determined to have suffered hardship by the Commissioner of Taxation
  3. You sincerely intend to live in your newly purchased home as soon as possible after the sale
  4. You intend to live in your new home for a minimum of six months of the first year after you move in
  5. You have not previously requested to release funds under the FHSS scheme
  6. You must use the funds to purchase a residential property. Premises that are not considered residential include houseboats, motor homes, vacant land and commercial space.

All Australians will be assessed on an individual basis, so even if you intend to purchase a property with a partner or family member you can both access and benefit from the FHSS scheme independently, pooling your money together for a final purchase. Note that this means that you can make use of the FHSS scheme even if you intend to buy a home with someone who is not eligible for the scheme.

Eligibility is determined on an individual basis, so if you want to buy a property with your partner you can both take advantage of the scheme.

How can you build up your savings?

You can start contributing to your super fund at any age, however you have to be over 18 to request a release under the FHSS scheme. There are two main methods of making contributions to your super and taking up the scheme. These are:

Remember that you can only contribute a maximum of $15,000 a year towards your first home and a total of $30,000.
Before actioning your FHSS scheme contribution plan, it's worth considering the following factors:

  • Double check that your chosen super fund can release your contributions for a first home purchase
  • Make yourself aware of any fees or charges that may be applied if you claim to have your funds released
  • Be aware that any contributions you make to your super for the FHSS scheme will also count as part of your normal contributions cap
  • Know that in the year when you release your contributions for your home purchase, the amount you release must be declared on your tax return and will impact your tax for that year.

How can you withdraw your super savings?

When you have chosen your first property and are ready to make your deposit, provided you meet the eligibility requirements, you can make a request to withdraw the money you have saved.

In order to release this money from your super, you will need to file a request to the Commissioner of Taxation. You can do this using the appropriate form on the Australian Taxation Office website.

Once you have permission to withdraw you will be able to claim:

  • 100% of eligible non-concessional contributions (after-tax personal contributions)
  • 85% of concessional contributions and earnings (pre-tax salary sacrifice amounts).

When you have received your claim you must use the funds to purchase a home within 12 months of receiving the money. Failure to do so will result in a 20% tax on your remaining super savings. If purchasing within the time limit becomes a problem, you can apply for a further 12 month extension or recontribute the funds to your super fund.

Want more advice about how and where to invest your super? Reach out to our team today.



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The information on this website is of a general nature only and does not take into account your personal objectives, situation or needs. You should consider obtaining professional financial, taxation and or legal advice tailored to your personal circumstances prior to making any financial decision.