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What is the First Home Super Saver Scheme?


You may have heard a lot about First Home Owner Grant and the First Home Buyer Stamp Duty Exemption/Concession but have you heard of the First Home Super Saver Scheme (FHSSS)?

Back in the Federal Budget 2017 -2018, the FHSSS was introduced by the Australian Government to reduce pressure on housing affordability. FHSSS allows you to save money for your first home within your superannuation fund, by taking advantage of the concessional tax treatment of super.

Accessing your super before retirement

There is widespread misunderstanding that you can only access your super benefits when you reach your preservation age (i.e. when you retire). However, FHSS is a special release opportunity, which allows early access to super, provided certain conditions are met.

You can use the scheme if you are living in or intend to live in your first home when it is practical to move in for at least six months within the first year after your purchase.

How it works

Under the scheme, you can make concessional (before-tax) and non-concessional (after-tax) contributions into your super fund specifically for a home deposit.

Before-tax contributions are taxed at only 15% (which could be less than your current tax rate), and after-tax contributions are made into your super from after-tax income.

Up to $15,000 annual release of your voluntary contribution is allowed, with the life cap totaled at $30,000. This means that a couple can enjoy a combined concession amount of $60,000.

Every strategy has its pros and cons

Like many strategies, the FHSSS has its upsides and downsides. Some of these pros and cons include:

Pros Cons
Drawing attracts favorable tax concession Money can only be accessed for first home deposit
Assist in accumulating savings as a deposit Slower process to access funds
Earnings on contribution only taxed at 15% Difficult to understand super rules

The First Home Super Saver Scheme may not be suited to everyone’s circumstances and needs. Before making any financial decisions it’s important to carefully consider all the pros and cons and the suitability of the strategy to your individual situation.

Looking to buy your first home or exploring your options? First Things First is The Hopkins Group’s dedicated site for first home buyers, providing all the education, advice and support you need to make your first home buying dreams a reality. To learn more or to arrange a free catch up with a member of our team, click here.

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