The FHSSS allows first home buyers to make voluntary contributions to their superannuation fund, which can then be withdrawn towards their home deposit.
These voluntary contributions can be made through salary sacrifice arrangements with your employer or personal contributions from your after-tax income.
Imagine skipping years of saving and finally stepping into your dream home sooner. The FHSSS makes this a reality by letting you contribute up to $15,000 per year (capped at $50,000 total) to your super, which you can then withdraw for your first home purchase.
This money grows within your super fund at concessional tax rates (15% compared to your marginal income tax rate), giving you a significant financial advantage.
Eligibility and Conditions for the FHSSS
To qualify for the FHSSS, you must meet the following conditions:
- Be at least 18 years old when requesting a FHSS determination or a release of money.
- Be a first home buyer who has never owned property in Australia before.
- Intend to occupy the property you buy as your principal place of residence.
- Not have previously made a FHSS release request.
How Much Can You Save?
There are limits to how much super you can save for your first home through the FHSSS:
- A maximum of $15,000 per financial year.
- A maximum of $50,000 in total over all years.
- You can also withdraw associated earnings after taxes.
Only contributions made from 1 July 2017 qualify for release.
How to Apply and Use FHSSS?
The process to apply and use the First Home Super Saver Scheme is relatively straightforward and comprises the following steps:
- Start Making Contributions: Begin making voluntary contributions through salary sacrifice or personal contributions.
- Submit a FHSS Determination Request: Request your maximum release amount from the ATO through your myGov account.
- Apply for a FHSS Release: Authorise the ATO to release your voluntary contributions and associated earnings.
- Sign a Contract: You have 12 months to sign a contract to buy or build your home.
- Notify ATO: Notify the ATO within 28 days of signing your contract.
Tips to Maximize Your Savings Through the FHSSS
First Home Super Saver Scheme can get you closer to your dream of buying your first home. Here are few tips to help maximize your savings:
- Start Early and Contribute Regularly: Even small contributions can accumulate over time due to compounding.
- Take Advantage of Salary Sacrifice: Reduce your taxable income and potentially lower your tax bracket.
- Make After-Tax Contributions: Consider this option if you fall into a higher tax bracket.
- Track Your Contributions: Stay informed about your contribution progress and FHSS determination request timing.
- Consult with a Financial Advisor: Get personalised advice tailored to your specific financial circumstances.
Types of Property You Can Purchase With FHSSS
The First Home Super Saver Scheme (FHSSS) provides flexibility in terms of the types of property you can purchase. It can be used to buy a wide range of residential properties, including:
- Existing houses
- New builds
- Off-the-plan properties
- Land with a contract to build a new home.
Pros and Cons of Using Super to Buy a House Through FHSSS
There are pros and cons of using FHSSS to purchase your first home, consider the following aspects before making the final decision.
- Accelerate your savings towards your home deposit.
- Benefit from a 15% tax rate on salary sacrifice contributions.
- Couples can double their benefit by each making an FHSS withdrawal.
- Leverage potential capital growth in the property market.
- Enjoy a structured savings plan.
- FHSS amount may not fully cover your deposit.
- Salary sacrifice reduces your take-home pay.
- Super funds become locked once deposited, making withdrawals for non-housing purposes difficult.
- Additional administrative work may be involved.
Importance of Receiving Financial Advice
Navigating financial matters can be complex. Consulting a qualified financial advisor can provide personalised guidance and ensure the FHSSS aligns with your unique financial goals and circumstances.
The FHSSS is a powerful tool for first home buyers, offering substantial benefits for those who plan carefully and utilise the scheme effectively.
By carefully considering your options and seeking professional advice, you can take advantage of this valuable program and achieve your dream of homeownership.
Apply for First Home Super Saver Scheme Loan
DotCapital provides comprehensive and tailored advice to first home buyers. Our team of experienced mortgage brokers possesses deep understanding of the FHSSS scheme.
We equip you with the knowledge and tools needed to make informed decisions aligned with your financial goals and circumstances.
Trust DotCapital to help turn your homeownership dreams into reality. Call DotCapital on 03 8707 2892 or click the button below to send us an email.