First home buyers

How You Can Use Your Super to Save for a Home Deposit

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Did you know that Australians can now make voluntary superannuation contributions of up to $15,000 a year for the purposes of buying a first home?

Under the recently legislated First Home Super Saver (FHSS) scheme first home buyers can make Super contributions up to a maximum of $30,000 over more than one year. Given the generous tax regime for Super investments, this investment can provide a handy return for those saving for a new home.

Let’s assume you make a concessional (before-tax) contribution. According to the government, the super contributions will be taxed at 15 per cent rather than your marginal tax rate (assuming you pay more than 15 cents in the dollar tax), and any investment earnings on those super contributions once the money reaches your super account are also subject to 15 per cent tax.

At the time you withdraw your savings, which must be from 1 July 2018 at the earliest, those savings will be taxed at your marginal tax rates less a 30 per cent tax offset.

If you want to get an idea of how much you can save for your home in this tax-efficient manner, you may want to use the government’s handy calculator www.budget.gov.au/estimator

But, while the FHSS is generous, it is fairly complicated.

  • So that you can compare this with saving your regular salary, you will need to understand your gross and net salaries
  • You will need to arrange with your employer to salary sacrifice super contributions – to show the banks that you can be a regular saver
  • Its important that you know if your Super Fund is set to handle FHSS contributions
  • You will need to get use to working with the Tax Office as the process of transferring the first home savings from your Super fund is not that straight forward

The First Home Super Saver Scheme is a generous new means of helping first-home buyers can their foot on the property ladder. If you want to get more information on how it can assist you getting your home loan, please call me on 1300 30 67 67.

2 responses to “How You Can Use Your Super to Save for a Home Deposit”

  1. david vas says:

    Hi I would like to know of for the FHSS, instead of salary sacrificing, is it advisable to terminate my term depoait ie lump sum S30,000 and put this in FHSS.

    Will this be beneficial in term of taxation? If the money is in FHSS- can I invest in REITS to earn better returns.

    Can he money that is in the FHSS be used to buy a investment property?
    Pls advise

    • Chan & Naylor says:

      Hi David. We only provide general info and cannot specifically advise you on your Super here. To answer your question, you can contribute the $30k over time and withdraw it via a specific form submitted to the Commissioner of Taxation.

      As to your own situation, we suggest you need a financial plan and we can investigate your timeframe, situation and the efficacy of the idea. The property has to be a first home – if it turns into investment property later that’s up to you, but it must be your home for a minimum period of six of the first 12 months that you own it.

      If you would like to discuss a plan, you can give us your number and preferred time so we can call you to discuss. Please feel free to call or email us if you wish. Thank you.

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