How the FHSS works
The scheme involves making additional contributions to your super account. These can be personal after-tax contributions or salary sacrifice contributions to save for your first home, which can later be withdrawn to assist in purchasing your first home. Once you buy a home, you must apply to the Australian Tax Office (ATO) to release these funds subject to meeting the eligibility requirements.
Utilising your super account to save for a home deposit efficiently accumulates funds, potentially offering tax benefits. This approach can help you reach your goal of home ownership more quickly and with financial advantages compared to traditional saving methods.
Eligibility and limits
To be eligible for the FHSS, you must be at least 18 years old, have never owned property in Australia, and have not previously accessed FHSS funds for home purchasing. You can apply to release a maximum of $15,000 from your personal super contributions per financial year, with a total cap of $50,000. Remember, only contributions made since July 1, 2017, are eligible, and this excludes contributions from your employer or spouse.
Considerations before proceeding
After withdrawing your funds under the FHSS, you must sign a contract to purchase or construct a home within 12 months. If you fail to meet this condition, you may be liable for a 20% FHSS tax. The property you purchase must be residential; it cannot be a houseboat, motor home, vacant land (unless you are building on it), or any other non-residential property.
Understanding contribution limits
The amount you can add to your super each year is capped and depends on factors like your age and super balance. Familiarise yourself with these contribution caps to plan your savings effectively.