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The First Home Super Saver Scheme

The First Home Super Saver Scheme

The Federal Government introduced the First Home Super Saver Scheme in 2017.

They designed it to assist first home buyers to build a deposit for a home by taking advantage of the tax concessions available to monies held in superannuation.

Why the First Home Super Saver Scheme was introduced

The First Home Super Saver Scheme was introduced during the property boom when first home buyers were finding it difficult to get into the market due to rapidly increasing prices.

The intent was to help first home buyers build a deposit faster within superannuation as compared to traditional forms of saving.

Who can participate in the scheme?

The Scheme is aimed at those over 18 years of age who have never owned property (home, land, investment property, commercial property) in Australia.

If there are two or more parties, (couples, siblings or friends) intending to buy the home, each can participate in the Scheme.

Key Positives The First Home Buyers Super Saver Scheme

How the First Home Super Saver Scheme helps you save!

The benefit for savers, is that contributions to superannuation are taxed at 15% when received by the Superannuation Company, not your marginal rate.

Added to this, earnings from the investments in superannuation are also taxed at a maximum concessional rate of 15%.

This compares to earnings on investments outside of superannuation that will normally be subject to tax at an individual’s marginal rate.

To get an idea as to how much more you could save via the Scheme use the Government Calculator below:

How much you can withdraw

Each participant in the Scheme can withdraw up to $15,000 of voluntary contributions made in any one financial year up to an overall total $30,000 (plus earnings that have accumulated on those funds)

For a couple, if each individually qualified for the Scheme, then their combined withdrawal would be $60,000 plus earnings.

When deciding how much you will contribute, it is important to:

  • Be aware that the Total Concessional Voluntary Contributions are currently capped at $25,000 in any one year. Beyond this an excess Concessional Contributions Charge is applied
  • Take into account, your current contributions to avoid the Concessional Limit being breached

Given these rules, and the complexity, it is important to seek guidance from your Super Fund and/or Financial Planner.

Key Points Of The First Home Buyers Super Saver Scheme

Critical Information

Whilst the Scheme offers genuine saving advantages for first home buyers, there are several important criteria you need to know:

  • You can only apply to release the funds one time!
  • You can’t make an offer to purchase, or sign a contract to construct a home, until AFTER the monies have been released from the First Home Super Saver Scheme
  • It can take up to 25 business days after you apply for the monies to be released
  • After you sign a contract to purchase or construct a home, you have 28 days to notify the First Home Super Saver Scheme
  • You have 12 months from when the money is released to sign a contract to buy or construct your home
  • If you do not sign a contract to buy or construct a home within this timeframe, you can request an extension of time up to a maximum of a further 12 months and/or re-contribute the amount (less tax withheld) back to your Super.
  • It is important to note however, if you do re-contribute the funds back to Super you CANNOT apply for their release at a later date!
  • If you choose to hold the funds beyond 12 months, a flat tax of 20% will be payable on the amount withdrawn
  • In the financial year you receive the monies from the Scheme, the amount needs to be included in your Tax Return (There will be a Tax Offset to also include in your return)

Seek Professional Advice

Whilst the Scheme offers genuine advantages to first home buyers, given it encompasses both superannuation and tax it is important to:

  • Check with your Superannuation Fund to confirm, if you participate in the Scheme, the funds can be released (some funds do not)
  • Confirm with your employer they offer salary sacrifice arrangements
  • Seek guidance from both your Financial Planner and Accountant

Summary

Saving to accumulate enough money to purchase your first home is always a challenge for most people.

The First Home Super Saver Scheme isn’t a magic bullet and there are strict conditions attached to it – however if you qualify, the tax concessions certainly help.

Doing a budget and working out how much you can afford to save is also an important step to ensure you can take full advantage of the opportunity.

The other critical element of buying a home, is to ensure your finance is truly market competitive and is tailored to your circumstances.

If you would like to understand what you can borrow, and on what terms, don’t hesitate to give me a call on 0421 304 990

Chris Anesco

I am an experienced Mortgage Broker and love helping my clients access the finance they need to buy a home, upgrade or undertake renovations.

I enjoy building long-term relationships and undertaking research to find truly market competitive offers. Attention to detail is one of my major strengths.

Chris Anesco is a credit representative (399790) of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237)

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