Save for your first home through super
Saving for your first home deposit is one of the biggest financial milestones in life – but for many people, it can feel daunting.
In July 2017, the government introduced has introduced the First Home Super Saver (FHSS) scheme.
The FHSS scheme helps you save for your first home by making extra contributions to your superannuation. Here’s how it works:
- Make extra contributions: add extra money to your super account through voluntary contributions1
- Withdraw those savings: you can withdraw eligible contributions up to $50,0002 later, along with an amount of deemed (estimated) earnings associated with these contributions3. If you're purchasing as part of a couple, each person can apply to access each of their eligible contributions under the scheme, so together potentially up to $100,000
- Tax and financial benefits: you could also benefit from tax savings when making pre-tax contributions4. Learn more about salary sacrificing.
Do I qualify for the First Home Super Saver scheme
To be eligible for the First Home Super Saver scheme (FHSS scheme), you must meet the following government conditions:
- Must be aged 18 years or older,
- Have never owned any property in Australia5,
- Intend to live in the property as soon as practical for at least 6 months (of the 12 months you own it),
- Plan to live in the property for at least 6 months within the first year of ownership,
- Have not previously made a successful FHSS scheme release request,
- Your name must be on the title of the property you buy, and,
- Plan to purchase a residential property – this excludes motor homes, house boats, and vacant land unless your contract is for the construction of a home on vacant land (you’ll need to enter this contract within 12 months of having your FHSS scheme funds released).
If you have lost ownership due to financial hardship, you might still qualify for the Superannuation First Home Saver Scheme. This includes circumstances such as:
- Bankruptcy
- Separation from a partner
- Job loss
- Illness
- Natural disaster
How much can I contribute
Voluntary contributions only
Before-tax contributions
After-tax contributions
Considerations
How much can I withdraw
How will I be taxed
When you withdraw funds from the First Home Super Saver (FHSS) scheme, the amount will be included in your assessable income for the financial year you requested the release, not the year you receive the money. This means you'll pay tax on the withdrawal as part of your annual tax return, along with any applicable tax offsets.
Additionally, you'll receive deemed earnings on your contributions, which may be lower than the actual earnings.
Keep in mind that investment earnings on your super are taxed at 15%. This may be lower than the tax rate applied to investment earnings outside of super.
The ATO will withhold tax based on your usual tax rate minus a 30% tax offset, or a flat rate of 17% if your usual rate can’t be determined. If you receive any benefits from Centrelink, it’s worth checking with them around any implications of FHSS withdrawals.
Boosting Kate’s super
By saving $200 a week in super rather than a bank, Kate saves $1,600 more towards her deposit in the first year. Taking her $1,874 tax savings into account, her overall savings through the FHSS scheme is $10,874 in the first year.
For further information about salary sacrificing and the FHSS scheme, download the Women and Super brochure.
How can I access my FHSS amount
These are the steps you need to follow before ownership of any property occurs.
Step 1: Request a determination
To request a determination on how much you are eligible withdraw under the FHSS scheme, you can log into your ATO online services account through myGov.
Select Super, then Manage, and then First home saver.
Step 2: Request the release of your super savings
An FHSS determination must be received before you can request a release. The ATO require the following information:
- Your FHSS determination outcome
- The amount you wish to be released
- The super fund or funds that you wish the amount to be released from
- The bank account you wish the funds to be released amount to
Step 3: Signing a contract for a home and notifying the ATO
For determinations made on or after 15 September 2024, you’ll need to sign a contract to purchase or construct a home and must notify the ATO within 12 months of requesting a release. If you don’t purchase a property within 12 months, you’ll need to notify the ATO to either:
- Apply for an extension for an additional 12 months,
- Keep the funds, subject to FHSS tax or,
- Recontribute the assessable FHSS scheme amount into super, less any withheld tax.
Determinations on or before 14 September 2024 can’t be cancelled or amended via ATO online services. If eligible, you’ll need to request a new determination.
Step 4: Receiving your FHSS amount
After your release request is approved by the ATO, they'll issue a release authority to your super fund(s) requesting your FHSS release amount be sent to the ATO. This amount will have the appropriate amount of tax withheld, and the remaining amount may be offset against any outstanding debts with government agencies.
It’ll form part of your assessable income in your tax return for the relevant financial year you requested the money to be released.
In most cases, it can take between 15-20 business days for your super fund to release your money to the ATO, and for the ATO to pay it to you.
Things to keep in mind
When deciding if the FHSS scheme is right for you, there are some things you need to consider.
-
Evaluate your situation
Determine if the FHSS scheme is right for you by considering your income, tax rates and how soon you plan to buy. It may be wise to seek personal financial advice first. As an AustralianSuper member, you’re eligible to access general simple financial advice, as well as being referred to a comprehensive financial adviser7.
-
Processing time
It may take up to 25 business days to receive your funds from the ATO on a valid request.
-
Savings limit
You can apply to access up to $50,0002 of eligible voluntary contributions through the FHSS scheme.
-
Tax implications
If you don’t find a home within the specified time limits, you may incur additional tax implications.
-
Contribution cap
Be mindful of the contribution caps that limit how much you can add to your super in a financial year without needing to pay additional tax.
-
Eligible property types
The property you buy must be a residence; vacant land is only allowed if you plan to build.
-
FHSS scheme determination required
Before finalising any property contract (commonly known as settlement), you must apply for and receive an FHSS scheme determination from the ATO. You can request a release of your amounts up to 90 days after entering a contract to purchase or construct a home.
-
Disclaimers
- Before adding to your super, consider your financial circumstances, eligibility, contribution caps that may apply, tax issues and when your super can be accessed. We recommend you consider seeking financial advice.
- Limited to $15,000 of voluntary contributions from any single financial year with a lifetime limit of $50,000.
- FHSS Scheme withdrawals include an associated earnings amount, which is a notional amount calculated by the ATO at the shortfall interest charge rate. This’ll be different from actual earnings in your super fund. All investments, including super, have some risk. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns.
- Salary sacrifice may affect some Government benefits and employee benefits. Consider getting financial advice before deciding if a salary sacrifice arrangement is right for you.
- If you have previously held a relevant property in Australia, you may be eligible if the ATO determines that you have suffered a financial hardship that resulted in a loss of ownership of all property interests.
- Superannuation Guarantee contributions made by your employer cannot be released under the FHSS scheme. Employer contributions are included in the before-tax (concessional) contributions cap, so it’s important to consider these amounts when making before-tax personal contributions.
- Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. Fees may apply.