The First Home Super Saver Scheme explained

What is the First Home Super Saver Scheme?

Under the First Home Super Saver Scheme, first home buyers can make voluntary contributions into their super fund to save for a home. You can withdraw a portion of those extra super contributions to use as a deposit. You can access up to $50,000 in voluntary super contributions in total.

Finder survey: Do Australians of different ages use government grants or schemes to take out their first home loan?

Benefits of the First Home Super Saver Scheme

• You can earn a higher return on your money as the return on a super account is higher than a regular savings account.
• You can salary sacrifice these contributions into your super account so they come from your pre-tax income. This means you’ll avoid being taxed for making deposits.
• The money in the account will be taxed at 15%, meaning most Australians using the scheme will pay much less tax on their contributions.
• When it’s time to withdraw funds, you’ll be taxed at a marginal rate less a 30% offset.

"I'm often asked what I think of this scheme, as it means accessing your super early. However, I'm not averse to it; you're effectively using your super monies to invest in a way that builds your wealth ie through property. Its structure is such that effectively it's a way to turbo charge your home deposit savings."

Pascale Helyar-Moray

Superannuation and wealth expert

The First Home Super Saver Scheme explained

Step 1: Depositing

You start by making voluntary super contributions into your superannuation account. If your employer agrees, you can make this through your pre-tax income to save on tax.

If your employer doesn’t agree to salary sacrifice or if you’re self-employed, you can contribute your post-tax income into the scheme and then make tax deduction claims on personal contributions afterwards. Money that’s deposited through post-tax income won’t be taxed when you withdraw it.

You can contribute up to $15,000 per year and up to $50,000 in total across years.

Step 2: While you’re saving

While the money sits in your super fund, it’ll be taxed at 15% rather than your regular tax rate. The earnings on any money you’ve deposited will also be taxed at this rate. Given that most Australians pay 30% or more in tax this is a big saving.

If you salary sacrificed $1,000 of pre-tax income into your super fund you'll end up with $850 after tax. If that money went into your bank account at your normal tax rate (assuming you're earning over $45,000 a year) you'd only pocket around $675.

Step 3: When you’re ready to withdraw

When you’re ready to withdraw you have to apply for a FHSS determination through the Australian Taxation Office (ATO), which is responsible for the scheme. You must apply for a First Home Super Saver determination before any property transfers to you.

Once you have the determination and are ready to access the money, you can request a release. You will need to provide the amount you wish to be released, the super fund(s) it's being released from and the bank account to pay the funds to. This can be done before signing the property contract or within 90 days of signing.

It will typically take between 15 and 20 business days for you to receive the funds.

How your funds are taxed

If you've made the additional contributions from your post-tax income, no further tax applies while it's in your account or when you withdraw it.

Pre-tax contributions will be taxed at 15% while they are in your super. When you withdraw the funds, these will be taxed at your marginal rate minus a 30% offset.

Your marginal rate is basically the per-dollar amount you get taxed in your tax bracket:

You can also withdraw the earnings that your money accrues while in your super account. Because you’ll be depositing these amounts into an account which already has non-First Home Super Saver Scheme funds in it, the amount of earnings you can withdraw will be decided using a percentage made up of the 90 day Bank Bill Swap Rate plus 3%. These earnings will also be taxed at your marginal rate with a 30% offset.

Who is eligible for the scheme?

To qualify for the first home super save scheme you must meet the following criteria:

• You must be 18 or older to access your super contributions.
• You must live in the property for at least 6 months, within the first 12 months of ownership.
• You have never owned a property before, including an investment property.
• You must not be using your contribution to purchase a houseboat, motor home or vacant land.
• You can only make use of the scheme once.
• Your name must be on the property title.

"Many Gen Zs, if they're anything like me, are probably with the same super account from their first job. It's probably a good idea to compare before opting in for the first home saver scheme, so you're not stuck in a fund for a few years that isn't performing as well as it could be. For me, I want to pick something stable that I can kind of set and forget for the next decade or two."

Karli Connors

Sydney-based partnerships executive, 26

More support for first home buyers

• The First Home Guarantee (formerly Loan Deposit Scheme) allows first home buyers to enter the market with a 5% deposit. They can also avoid LMI costs.
• The Family Home Guarantee lets eligible single parents buy a home with a 2% deposit.
• There are also first home owner grants available in every state and territory and possible stamp duty exemptions for first-time buyers.
• The Regional Home Guarantee lets you buy or build a new home in regional Australia with a 5% deposit while avoiding LMI costs.

Frequently Asked Questions

• Is the first home buyer super saver scheme worth it?

  The First Home Super Saver Scheme (FHSS) can be worth it as it allows first home buyers to save money within their superannuation account, benefiting from lower tax rates and potential investment returns.

• What is the first super saver scheme?

  The First Home Super Saver Scheme (FHSS) allows first home buyers to make voluntary superannuation contributions to save for a home deposit, which can then be withdrawn to use as a deposit on a house. It helps you saver your deposit sooner due to tax benefits.

• Can you take money out of your super for your first home?

  Yes, under the FHSS, you can withdraw voluntary super contributions, along with associated earnings, to use as a deposit for your first home.

• What is an example of a first home super saver?

  An example would be making additional voluntary contributions of $15,000 per year into your super, on which you only pay tax of 15%. This is instead of receiving that money in your regular pay and paying full tax of up to 45%. This money is then invested via your super, and you can withdraw this many and any investment returns to use as a home deposit.

• What are the pros and cons of FHSS?

  Pros include tax benefits, potential investment growth, and helping to save a deposit faster. Cons include superannuation access restrictions and potential market volatility impacting your returns.

• How much can you withdraw from First home Super Saver Scheme?

  You can withdraw up to $50,000 of your voluntary super contributions under the FHSS, along with the earnings on those contributions.

• Is using your super to buy a house a good idea?

  Using super to buy a house can be a good idea due to tax benefits and faster savings, but it reduces your retirement savings and is subject to superannuation rules and market risks.

• Is FHSS considered genuine savings?

  Yes, savings accumulated through the FHSS are considered genuine savings, which can be beneficial when applying for a home loan.

• Can my partner and I access the scheme together?

  Yes. Applicants using the scheme are assessed individually and can purchase a property together. So if you and your partner meet the eligibility criteria and have made voluntary contributions to your super funds you can make double use of the scheme, doubling your maximum amount from $50,000 for one person to $100,000.

• What should I be wary of when accessing the FHSS?

  Because any money deposited under this scheme will be at the mercy of your super account performance, comparing super accounts and also updating your risk appetite will be crucial. You can compare super accounts in our guide.

• Is there a minimum amount I need to deposit to be able to use this scheme?

  There has been no mention of a minimum amount when making voluntary contributions for the FHSS.

• What if I'm self-employed or my employer doesn't offer salary sacrificing?

  If you're self-employed or your employer doesn't want to offer salary sacrificing, the scheme is still available. These first home buyers will be able to deposit their post-tax income and then reconcile these deposits during tax time, taking advantage of tax deductions for the contributions.

To make sure you get accurate and helpful information, this guide has been reviewed by Pascale Helyar-Moray, a member of Finder's Editorial Review Board.

Written by

Richard Whitten

Senior Money Editor

Richard Whitten is Finder’s Senior Money Editor, with over eight years of experience in home loans, property, credit cards and personal finance. His insights appear in top media outlets like Yahoo Finance, Money Magazine, and the Herald Sun, and he frequently offers expert commentary on television and radio, helping Australians navigate mortgages and property ownership. Richard started his career in education and textbook publishing in South Korea. He holds multiple industry certifications, including a Certificate IV in Mortgage Broking (RG 206) and Tier 1 and Tier 2 certifications (RG 146), as well as a Bachelor of Education from the University of Sydney and a Graduate Certificate in Communications from Deakin University. See full bio

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