1/2 – First Home Super Saver Scheme Explained

There is no doubt that buying into today’s property market is hard, but the government is aiming to help first home buyers through the tax-friendly savings vehicle that is superannuation.

The first home super saver scheme (FHSSS) was introduced in the 2017-2018 Federal Budget to improve housing affordability for first home buyers. It was part of a suite of measures designed to put downward pressure on rising housing costs.

The government estimated that by using the plan, first home savers could potentially boost their savings by at least 30% compared to a standard deposit account.

How does the first home super saver scheme work?

The first home super saver scheme (FHSSS) allows first home buyers to make voluntary contributions – before tax or after tax – into their superannuation up to a certain amount which they can access later for their home deposit.

This can be a great way to save a deposit faster. Voluntary contributions are especially beneficial in the case of concessional contributions to super – which are taken out of before-tax earnings – as the amount won’t be taxed at an individual’s personal income tax rate but rather the 15% superannuation tax rate in the fund.

How Much Can You Contribute?

You can contribute up to $15,000 a year and up $50,000 in total. You must not exceed the annual contribution limits ($27,500 per year for concessional contributions) which include the superannuation guarantee amounts your employer puts in.

Who Can Access It?

You must never have owned property previously (and this is any kind of property including an investment property, vacant land, commercial property, a lease of land, or a company title interest in land) and must not have used the scheme before.

However, because it is assessed on an individual basis, couples, siblings, or friends can each use their own FHSSS contributions to purchase the same property if they are first home buyers. A couple could therefore each access their $50,000 in savings for a combined $100,000 deposit.

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