Save for your first home through super
Saving for your first home deposit is one of the biggest financial milestones in life – but for many people, it can feel daunting.
In July 2017, the government introduced the First Home Super Saver (FHSS) scheme.
The FHSS scheme helps you save for your first home by making extra contributions to your superannuation. Here’s how it works:
- Make extra contributions: add extra money to your super account through voluntary contributions1
- Withdraw those savings: you can withdraw eligible contributions up to $50,0002 later, along with an amount of deemed (estimated) earnings associated with these contributions3. If you're purchasing as part of a couple, each person can apply to access each of their eligible contributions under the scheme, so together potentially up to $100,000
- Tax and financial benefits: you could also benefit from tax savings when making pre-tax contributions4. Learn more about salary sacrificing.
Do I qualify for the First Home Super Saver scheme
To be eligible for the FHSS scheme, you must meet all of the following government conditions:
- be aged 18 years or older when requesting a FHSS determination
- have never owned any property in Australia5,
- genuinely intend to occupy the property as a home as soon as you reasonably can after buying it and, after meeting this condition, occupy the property for at least 6 of the first 12 months after moving in
- never made a previously successful FHSS scheme release request,
- have your name on the title of the property you buy, and
- intend to purchase a residential property – this excludes motor homes, house boats, and vacant land unless your contract is for the construction of a home on vacant land (you’ll need to enter this contract within 12 months of having your FHSS scheme funds released).
If you have lost ownership due to financial hardship, you might still qualify for the FHSS scheme. This includes circumstances such as:
- bankruptcy
- divorce or relationship breakdown
- job loss
- illness
- natural disaster
How much can I contribute
Before-tax contributions
After-tax contributions
Considerations
How much can I withdraw
How will I be taxed
When you withdraw funds from the First Home Super Saver (FHSS) scheme, the amount will be included in your assessable income for the financial year you requested the release, not the year you receive the money. This means you'll pay tax on the withdrawal as part of your annual tax return, along with any applicable tax offsets.
Additionally, you'll receive deemed earnings on your contributions, which may be lower than the actual earnings.
Keep in mind that investment earnings on your super are taxed at 15%. This may be lower than the tax rate applied to investment earnings outside of super.
The ATO will withhold tax based on your usual tax rate minus a 30% tax offset, or a flat rate of 17% if your usual rate can’t be determined. If you receive any benefits from Centrelink, it’s worth checking with them around any implications of FHSS withdrawals.
Boosting Kate’s super
By saving $200 a week in super rather than a bank, Kate saves $1,500 more towards her deposit in the first year. Taking her $1,874 tax savings into account, her overall savings through the FHSS scheme is $10,874 in the first year.
How can I access my FHSS amount
These steps offer a brief guide of the process you need to follow before ownership of any property can occur. For full details of the FHSS steps, visit ato.gov.au
Step 1: Request a determination
To request a determination on how much you are eligible withdraw under the FHSS scheme, you can log into your ATO online services account through myGov.
Select Super, then Manage, and then First home saver.
Step 2: Request the release of your super savings
After you've received your FHSS determination, you can request a release. The ATO require the following information:
- Your FHSS determination outcome.
- The amount you wish to be released.
- The super fund or funds that you wish the amount to be released from.
- The bank account you wish the funds to be released amount to.
Step 3: Signing a contract for a home and notifying the ATO
If your FHSS determination was made on or after 15 September 2024, you should make a release request within 90 days of signing the contract and notify the ATO. If you don’t purchase a property within 12 months, you’ll need to notify the ATO to either:
- apply for an extension of time to sign a contract for a further 12 months – up to a maximum of 24 months after the date of your release request
- keep the funds, subject to FHSS tax or,
- recontribute the assessable FHSS scheme amount into super, less any withheld tax.
For determinations made on or before 14 September 2024, you should make a release request within 14 days of signing the contract. Your determination can't be cancelled or amended via ATO online services. If eligible, you’ll need to request a new determination.
Step 4: Receiving your FHSS amount
After your release request is approved by the ATO, they'll issue a release authority to your super fund(s) requesting your FHSS release amount be sent to the ATO. This amount will have the appropriate amount of tax withheld, and the remaining amount may be offset against any outstanding debts with government agencies.
It’ll form part of your assessable income in your tax return for the relevant financial year you requested the money to be released (not the date you received the money).
In most cases, it can take between 15-20 business days for your super fund to release your money to the ATO, and for the ATO to pay it to you.
Things to keep in mind
When deciding if the FHSS scheme is right for you, there are some things you need to consider.
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Evaluate your situation
Determine if the FHSS scheme is right for you by considering your income, tax rates and how soon you plan to buy. It may be wise to seek personal financial advice first.
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Savings limit
Using the FHSS scheme, you can contribute up to a maximum of $15,000 in any one financial year and up to a maximum of $50,000 across all years. -
Tax implications
The ATO will withhold tax on your FHSS withdrawal amounts based on either:
- your expected marginal tax rate (including Medicare levy) less a 30% tax offset, or
- 17%, if they're unable to estimate your expected marginal rate.
The tax withheld is calculated on your assessable FHSS withdrawal amount and will help you meet your end of year tax liabilities. When you lodge your return, the ATO will know your actual tax rate for the year in which you requested the release and will recalculate your liability on the released amount. They'll take into account the tax that has already been withheld from your assessable FHSS withdrawal, together with the 30% tax offset.
If you don't find a home within the specified time limits, there may be additional tax implications.
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Contribution cap
Be mindful of the contribution caps that limit how much you can add to your super in a financial year without needing to pay additional tax.
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FHSS scheme determination required
It's important you consider the timing when you start the home buying process because you must apply for and receive an FHSS determination from the ATO before finalising your property purchase (commonly know as settlement).
You can make a release request before signing a property contract, or within a limited period after signing a contract, depending on when you received your FHSS determination. It may need to be within 14 or 90 days of signing a contract.
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Processing time
After you've made a valid release request, the ATO will authorise us to release your FHSS amount to them. It may take up to 25 days for the ATO to release your funds to you.
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Disclaimers
- Before adding to your super, consider your financial circumstances, eligibility, contribution caps that may apply, tax issues and when your super can be accessed. We recommend you consider seeking financial advice.
- Limited to $15,000 of voluntary contributions from any single financial year, with a lifetime limit of $50,000 of total voluntary contributions made from 1 July 2017.
- FHSS Scheme withdrawals include an associated earnings amount, which is a notional amount calculated by the ATO at the shortfall interest charge rate. This’ll be different from actual earnings in your super fund. All investments, including super, have some risk. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns.
- Salary sacrifice may affect some Government benefits and employee benefits. We recommend you consider seeking financial advice before deciding if a salary sacrifice arrangement is right for you.
- If you have previously held a relevant property in Australia, you may be eligible if the ATO determines that you have suffered a financial hardship that resulted in a loss of ownership of all property interests.
- If you’re 75 or older, you can only claim a tax deduction for contributions if made within 28 days after the end of the month you turned 75. If you’re claiming a deduction for an after-tax super contribution, the contribution will count towards your concessional contributions cap.
- Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. Fees may apply.