Better understanding the First Home Super Saver Scheme
Introduced in the Australian Government’s 2017/2018 Federal Budget, the First Home Super Saver (FHSS) scheme is designed to make purchasing your first home easier and more affordable.
The FHSS gives you the opportunity to save money for a first home in your superannuation fund. In theory, this should help you to increase the speed at which you save money for a first home thanks to the concessional tax benefits of superannuation.
If you’d like to learn more about the scheme, take a look at our breakdown below to gain a better understanding of how it can help you as a first-time buyer.
What are the main changes that have been introduced?
The FHSS scheme was first introduced on July 1st 2017, allowing you to make concessional (pre-tax) and non-concessional (post-tax) contributions into your superannuation fund to save for your first home.
As of July 1st 2018, first-time home buyers are now able to apply for their voluntary contributions to be released to help fund a property purchase. However, there are eligibility requirements which must be met.
Who's eligible for the First Home Super Saver Scheme?
To qualify for the FHSS scheme there are a few requirements to meet:
- You cannot have made use of the scheme before.
- You cannot already own property in Australia (unless you have been deemed to have suffered extreme financial hardship).
- You must be over the age of 18 to access your superannuation contributions (although, you are still able to pay into any super fund should you wish to before the age of 18).
After moving into your new home, you’ll be bound by the FHSS agreement to live in your first home for at least six months of the first 12 months after owning it. There is some leeway here as you need to only move in when it’s ‘practical’ to do so.
Finally, the First Home Super Saver Scheme will not allow you to purchase a houseboat, motorhome, or vacant land.
What are the benefits for first home buyers?
The First Home Super Saver Scheme can be a huge benefit to couples looking to purchase their first home. With the new scheme, couples are able to make super contributions individually before releasing the funds at a later date to pool together.
To help make things easier for you from the start, you won’t need to open any new or separate accounts to make voluntary contributions into your super. This is provided that you’re not a sole trader or small business owner.
For most Australians, the biggest benefit of the FHSS comes in its saving potential. In his 2017 Federal Budget speech, Prime Minister Scott Morrison outlined how most first-time buyers would see their savings accelerate by at least 30% under the new scheme.
How can you release your funds?
When you’re ready to access and release your FHSS contributions, you can do so up to a maximum of $15,000 from any one financial year and up to a maximum of $30,000 across every year you’ve saved. After releasing your savings, you then have 12 months to buy or construct your first home. Click here for more information on the FHSS scheme.
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