The first home super saver scheme (FHSS) allows eligible Aussies to invest extra into their super fund and then withdraw that money to help fund a home loan deposit.
Aimed at giving first-time buyers the chance to boost their savings in order to get on the property ladder, there are, as with any financial plan, some pros and cons.
Let’s go through the elements of the scheme and see if it’s right for you.
Show me the money
Let’s be real, not everyone has access to a gift of money, a loan, or a guarantor when it comes to getting on the property ladder.
And the deposit for your first home could be the most money you’ve ever saved.
So, here’s how it works:
- As of 1 July 2022, you can withdraw up to $50,000 per person.
- You can contribute up to $15,000 into your super per year to use in this scheme.
- You can purchase any residential property within Australia, (not a commercial property such as a shop) – the home must be a fixed home (i.e. not a houseboat or motorhome).
- You can also use the FHSSS to build a home.
Factors to consider
Ready to step onto the property ladder?
The scheme can be complex. Here are some factors to think about before jumping in:
- If you decide not to buy a house, you either need to put the money back into your super or withdraw it and get taxed.
- Once you sign a contract, you've got just two weeks to put in a request to withdraw your savings – and getting your money out usually takes 15–25 business days.
- You also need to consider how much tax you'll pay on the money while it's in your super account – and how much tax you'll pay when you take it out.
- You can save a maximum of $50,000, so it will probably cover only part of a house deposit
Having said that, this scheme does mean you may be able to save for a deposit for your first home quicker and you can save on tax because you're paying the lower super tax (15%) instead of your usual income tax which can be as high as 45% (but remember to factor in the tax you'll pay when you withdraw the money).
Who is eligible?
Generally, you can only use the FHSSS if you've never owned any property in Australia.
But exceptions can be made if you can show financial hardship such as through a divorce, bankruptcy, or being affected by a natural disaster.
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