How to use your super to save for a home deposit

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The First Home Super Saver (FHSS) scheme was brought in by the Federal Government in2017-18 to boost housing affordability but how exactly does it work?

The FHSS allows you to save a deposit for a home inside your super fund and helps first-home buyers get there quicker by using the concessional tax treatment within super.

Through the scheme individuals can voluntarily contribute up to $15,000 a year and $30,000 in total.

So, if you’re lucky enough to be with a partner, the pair of you can save up to $60,000 and put it into super to supercharge your deposit savings.

The Australian Tax Office say people can boost their savings by 30 per cent through the FHSS scheme compared to a standard deposit account.

Federal Treasurer Scott Morrison says the FHSS is a necessary tax cut for young Australians saving for their first home.

“From July 1, 2018, first-home buyers will be able to withdraw voluntary superannuation contributions they have made since July 1, 2017, along with a deemed rate of earnings, to help buy their home,” he said.

“This will give first-home buyers a significant leg up towards saving their deposit, helping them overcome a key barrier for getting into the housing market.”

Contributions can be made from any age but you can’t request a release of funds from FHSS until you’re 18 years old.

To qualify for the FHSS scheme you must:

– Have not previously owned property in Australia

– Have not previously released FHSS funds

– Live in or intend to live in the premises you’re buying as soon as practical

– Intend to live in the property for at least 6 months of the first 12 months you own it

So how do you start?

You can make contributions into any fund but before you do you should:

– Check your super fund will release the money because FHSS contributions may not be released from defined benefit interests or constitutionally protected funds

– Check what fees and insurance implications apply

– Be aware that if you receive FHSS amounts you will receive a payment summary and you will need to include the assessable amount in your tax return

There are two types of contributions you can make. Firstly, there’s concessional contributions, which include salary sacrifice amounts or contributions for which a tax deduction has been claimed. These are taxed at 15 per cent.

Secondly, there’s non-concessional contributions which are made after tax or where a tax deduction has not been claimed.

Once you’ve made your contributions and are ready to access your FHSS funds to buy a home you need to apply to the Commissioner of Taxation for an FHSS determination and release of your funds.

You can withdraw all of your non-concessional amounts and 85 per cent of concessional amounts.

Once you’ve withdrawn the funds you’ve got 12 months to sign a contract to purchase or construct a home. So get cracking and find a bargain!


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