Tips From Our Financial Advisors on the First Home Super Saver Scheme
Buying your first home is undoubtedly daunting! It’s a huge investment, and the primary financial goal that many people strive for.
Getting into the property market is a complicated process, and first home buyers often struggle with the challenge of increasingly difficult housing affordability.
Consulting one of our financial advisors in Geelong is a great way to learn how to maximise your savings and unlock ways to make the purchase process as efficient as possible. An example of this is the First Home Super Saver scheme.
How to save for a first home?
The First Home Super Saver (FHSS) scheme is a strategy that we can help you implement and manage so that financing your first home can be achieved sooner.
The FHSS scheme allows individuals to make a withdrawal from their superannuation fund to help cover the costs of buying their first home. Voluntary contributions (both concessional and non-concessional) made to their super fund can be released for a period of time.
Voluntary contributions include:
Undeducted (non-concessional) personal contributions
Deducted (concessional) personal contributions
Salary sacrifice contributions
Up to $30,000 (plus associated earnings) can be released from an individual’s super fund as part of the FHSS scheme.
Voluntary contributions made to your superannuation increase the amount you can release through the FHSS scheme, however no more than $15,000 can be contributed in any financial year.
The scheme was introduced in 2018 to reduce the pressure of housing affordability and help first home buyers get into the housing market.
The scheme allows aspiring first home buyers to start putting money aside and saving inside their superannuation fund. This makes it easier to save quickly with the help of the concessional tax treatment of super.
Once you’re ready to buy, the contributions (as well as the accrued earnings) can be released and put towards purchasing your first home.
What’s the best way to start saving for your first home?
Making regular voluntary contributions to your superannuation (within your existing budget) will allow you to maximise the amount available for your FHSS scheme withdrawal.
Whether you are planning to buy your first home in the near future or further down the road, utilising the FHSS scheme can be a great asset for reaching your financial goals.
Our financial advisors can guide you through the process and help you determine how much to contribute and how often.
Am I eligible for the FHSS scheme?
The scheme is available to individuals who:
Are living on the premises they are buying, or intend to as soon as practicable
Intend to live in the property for at least six months within the first 12 months of owning it, after it is practical to move in.
Have never owned property in Australia – this includes an investment property, vacant land, commercial property, a lease of land in Australia, or a company title interest in land in Australia (unless the Commissioner of Taxation determines that you have suffered a financial hardship)
The FHSS scheme is only available to be claimed once, so it is best to have an existing financial plan in place to help you prepare and control your money in the lead up to your purchase.
From the date your withdrawal is accepted, and your money is released, you have 12 months to do one of the following:
Sign a contract to purchase or construct your home.
Recontribute the assessable FHSS amount (less tax withheld) back into your super fund.
If choose to keep the FHSS money, you will be subject to the FHSS tax. This is a flat tax equal to 20% of your assessable FHSS released amounts and not the total amount released.
To find out more, head to the Australian Tax Office FHSS scheme webpage which explains the scheme in further detail.
Our expert advisors can help you navigate the process of buying your first home and explain any questions you may have about superannuation or the FHSS scheme.