Super opportunity for first home buyers

July 12, 2019 / by Altitude Wealth Management / Articles

Super opportunity for first home buyers

June 2019

Eligible first home buyers can save for their deposit in the concessionally taxed superannuation system, using the First Home Super Saver Scheme (FHSSS or scheme).

If you qualify, this scheme may help you accumulate a larger deposit when compared to saving outside super.

Key dates

Voluntary contributions made to the scheme from 1 July 2017 can be withdrawn.

What and how much can you contribute?

Only voluntary contributions you make to super will count towards your FHSSS balance.

Voluntary contributions include personal, salary sacrifice and additional employer contributions, but not compulsory employer contributions (such as Superannuation Guarantee) and certain other amounts.

Voluntary contributions that count towards the amount that can be released are limited to $15,000 per year and a total of $30,000. These contributions also count towards the existing contribution caps.

How much and when can you withdraw?

Withdrawals are capped at $30,000 plus associated earnings. The Australian Taxation Office (ATO) will calculate the associated earnings based on a formula, not the actual earning rate. They will also determine the amount that can be released after allowing for applicable taxes.

You can request to find out what your maximum withdrawal amount is from the ATO as often as you prefer.

You can withdraw from the scheme before you have found a place to buy, but you’ll need to buy within 12 months of withdrawing. If not, the ATO may grant a 12 month extension. You can also apply to withdraw the available amount within 14 days of entering into the contract to purchase or construct a home.

Who can participate?

To participate in the scheme, you generally need to be aged 18 or over, have not used the scheme before and have never owned real property in Australia. You may still be eligible if you plan to purchase a home with a partner who doesn’t meet the criteria.

What can you buy?

You must buy a ‘residential premises’ with any amount withdrawn using the FHSSS. This includes vacant land if you’re planning to build. The premises has to become your home (not an investment property) and you need to occupy it for at least six months after you buy or build it.

What happens if you don’t buy?

If you don’t buy within the required timeframe, you can contribute the released amount back into super or keep the money and pay tax equal to 20% of the assessable amount.

Could you benefit from the FHSSS?

We can help determine whether saving for a home deposit using the FHSSS is a suitable option for you and assess other options.

Important information and disclaimer

This article has been prepared by Altitude Wealth Management. Any advice provided is of a general nature only. It does not take into account your objectives, financial situation or needs. Please seek personal advice before making a decision about a financial product. Information in this article is current as at June 2019. While care has been taken in the preparation of this article, no liability is accepted by the Altitude Wealth Management or its related entities, agents or employees for any loss arising from reliance on this article. Any opinions expressed constitute our views at the time of issue and are subject to change. Case studies are for illustration purposes only. Any tax information provided in this article is intended as a guide only. It is not intended to be a substitute for specialised tax advice. We recommend that you consult with a registered tax agent.