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The First Home Super Saver Scheme was originally introduced in 2017, updated in 2019 and then extended further in the 2021 Federal Government Budget.
The Scheme is designed 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.
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, a situation that has continued in 2021 despite the impact of COVID-19
The intent the Scheme is to help first home buyers build a deposit faster within superannuation as compared to traditional forms of saving.
Who can participate in 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 Can You Contribute to the First Home Buyers Super Saver Scheme?
Given these rules, and the complexity, it is important to seek guidance from your Super Fund and/or Financial Planner.
How Much You Can Withdraw
Your contributions can’t exceed your current superannuation contribution caps.
From 1 July 2021, the general concessional contributions cap is $27,500 for all individuals regardless of age, lower caps apply for previous years.
Applying for Release of Your Savings
When you are ready to seek release of the funds you have saved and the associated earnings you need to apply for a determination using your online My Gov Account.
Prior to applying, it is important to ensure each contribution is eligible for withdrawal and all the information you have provided is correct.
Seek Professional Advice
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.