How does the First Home Super Saver Scheme work?

Are you a first home buyer looking to save for a deposit? The First Home Super Saver Scheme (FHSSS) could help you save for a home deposit faster.

  • The First Home Super Saver Scheme (FHSSS) helps first home buyers to save a home deposit faster
  • If eligible, you could withdraw up to $50,000 of voluntary super contributions plus associated earnings to put towards a home deposit
  • There are tax concessions and tax considerations involved in the FHSSS

What is the First Home Super Saver Scheme?

The FHSSS lets you use superannuation to help save for your first home.

This scheme enables you to withdraw voluntary contributions to your super and use them for your home deposit, provided you meet eligibility criteria. Once you’re ready, you can apply to release up to $15,000 from one financial year, up to a maximum of $50,000 across all years (for contributions made from 1 July 2017), plus any associated earnings.

It’s important to remember that these must be voluntary contributions which are separate to the Super Guarantee (SG) contributions made by your employer. Voluntary contributions include salary sacrifice and personal contributions.

Learn more about the different types of super contributions.

What are the FHSSS eligibility criteria?

  • You are 18 or older when making a FHSSS release request
  • You have not owned property in Australia before (unless you lost your property due to financial hardship)
  • You have not previously made a FHSSS release request
  • You intend to occupy the property for at least six months within the first 12 months after it’s capable of being occupied

Benefits of using superannuation for first home buyers

The FHSSS uses the tax benefits of superannuation to help you save more money to put towards your home deposit. Since some voluntary contributions (e.g. salary sacrifice) are taxed at 15%, you could benefit if this is lower than your marginal tax rate.

You’ll also receive associated earnings when you withdraw your money. This refers to an applied growth rate to your contributions determined by the ATO which is usually higher than your savings rate. For the January-March 2024 quarter, the associated earnings rate was 7.38% p.a.1 For example, let’s say you made a one-off $10,000 voluntary personal contribution to your super fund. Two years later, after applying the ATO’s growth rate, your earnings from that contribution are $1,000. Under FHSSS, you’d be able to withdraw your initial $10,000 contribution plus the $1,000 earnings.

The FHSSS is assessed on an individual basis so couples can also combine their FHSSS benefits to purchase a home. 

Learn more about using superannuation to save on tax

How to make voluntary superannuation contributions

You can get started with the FHSSS by making voluntary contributions to your superannuation through:

  • Setting up salary sacrifice with your employer
  • Making post-tax personal contributions to your super fund

If you intend to claim a tax deduction on your personal contributions, you’ll need to provide a copy of the Notice of intent to claim a tax deduction for personal super contributions  to your super fund before applying for a FHSS determination. Remember, contributions on which you claim a tax deduction will be counted towards your concessional contribution cap.

When participating in FHSSS, the general contribution caps for super still apply. As of the 2024 financial year, this is $27,500 for annual concessional contributions and $110,000 for annual non-concessional contributions. This means contributions in excess of these amounts could result in more tax.

Are you an Essential Super member? Find out how to make a personal contribution .

How to withdraw your FHSSS funds to buy a house

Once you’re ready, you can apply to release up to $15,000 from one financial year, up to a maximum of $50,000 across all years (for contributions made from 1 July 2017), plus any associated earnings.

The amount you can release under the FHSSS includes:

  • 100% of your eligible voluntary personal super contributions (non-concessional contributions)
  • 85% of your eligible voluntary personal super contributions on which you’ve claimed a tax deduction (concessional contribution)
  • 85% of your eligible salary sacrifice contributions (concessional contribution)

For example, let’s say in a single year you contributed $5,000 in salary sacrifice contributions and $3,000 in personal contributions from your after-tax savings, then under FHSSS you’d be eligible to withdraw:

  • 85% of the $5,000 salary sacrifice contributions = $4,250
  • 100% of the $3,000 personal contributions = $3,000
  • Plus any associated earnings

Follow these steps to withdraw your money:

  1. Sign into myGov.
  2. Apply for a ‘FHSSS determination’. The ATO will let you know the maximum FHSSS release amount.
  3. Submit a request to the ATO to release your FHSSS amount, up to the amount stated on your FHSSS determination.
  4. Once your funds are released, the ATO will send a release authority to your super, instructing your super fund to release the funds to the ATO. The ATO will then withhold any applicable tax and pay the rest to you. This process normally takes 15 to 20 business days.

Fund withdrawals under FHSSS can impact your assessable income come tax time. The ATO will assist in providing a payment summary, which outlines the assessable components. The tax payable on the assessable amount will receive a 30% tax offset. See ATO for more information on this.

If you receive any benefits from Centrelink, it is worth checking with them around any implications of FHSSS withdrawals.

Applied conditions

There are a few conditions you should know:

  • The contract must be for residential property in Australia. You can’t use the FHSSS to buy a motorhome or houseboat.  
  • You have 12 months to buy a property or enter a contract to build a home from the date you submitted your withdrawal request to the ATO. You must notify the ATO via myGov within 28 days of signing the contract.
  • If you don’t sign a contract to purchase or construct a home within the 12 months, the ATO may grant you an extension for a further 12 months.
  • If after the 12 months extension you still haven’t signed a contract to purchase or construct a home, you can either choose to recontribute the funds into your super account (which would be counted as a non-concessional contribution) or keep the funds and be subject to FHSSS tax of 20%.
  • Concessional contributions and associated earnings amounts released under the FHSSS is included in your assessable income in the year you requested the release and are taxed at your marginal tax rate. You will be entitled to a 30% tax offset on the FHSSS assessable amount.

You must have an FHSS determination before signing a property contract. The release amount must be requested within 14 days of signing a property contract (this is set to be extended to 90 days from 20 September 2024).

How to apply for FHSSS financial hardship

If you’ve lost a property you owned due to financial hardship, you may be eligible to apply for the FHSSS even if you’re not a first home buyer.

Contact the ATO to see if you meet one of the eligibility criteria. These include:

  • bankruptcy
  • divorce, separation from a de-facto partner or a relationship breakdown
  • loss of employment
  • illness
  • a natural disaster

You can apply for financial hardship using myGov or by completing the First Home Super Saver Scheme Hardship Application Form.

As part of your application, the ATO will ask you to provide evidence that demonstrates how the hardship event resulted in you losing your property. 

 

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Things you should know

1 ATO Shortfall interest charge (SIC) rates

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