What super contributions are eligible for the First Home Super Saver scheme?
Not all contributions you make are counted towards FHSS, so it’s important that if you choose to use the scheme to save for first home, you are making the right types of contributions to your super.
- Voluntary concessional you made after 1 July 2017 – contributions made before-tax (e.g. salary sacrifice and personal deductible contributions)
- Voluntary non-concessional contributions you made after 1 July 2017 – contributions made after-tax (e.g. extra contributions which you didn’t claim a tax deduction for).
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- Mandatory SG contributions made by your employer
- Spouse contributions
- Amounts received from a contribution-splitting arrangement
- Government co-contributions
- Amounts that exceed contribution caps
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- Voluntary concessional you made after 1 July 2017 – contributions made before-tax (e.g. salary sacrifice and personal deductible contributions)
- Voluntary non-concessional contributions you made after 1 July 2017 – contributions made after-tax (e.g. extra contributions which you didn’t claim a tax deduction for).
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- Mandatory SG contributions made by your employer
- Spouse contributions
- Amounts received from a contribution-splitting arrangement
- Government co-contributions
- Amounts that exceed contribution caps
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What are the pros and cons of using super to buy a home?
- Potential tax savings – You could save money on taxes, compared to saving outside of super (that may be subject to your marginal tax rate), which can help boost your deposit savings
- Saving discipline – Unlike your bank account, where your funds are easily accessible, you generally can't withdraw your super whenever you want, as there are ‘strict conditions of release’. Think of it as forced savings that may even generate potential returns. It can be especially useful for those who find it hard not to dip into their savings.
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- Complex rules – Under the FHSS scheme, specific rules apply to when, what, and how much you can withdraw. Separately, there are also limits on how much you can contribute to your super. These rules can be tricky to navigate so it’s important to check the rules early on, and well before you sign a contract to buy a home with the expectation of withdrawing funds through the FHSS.
- Strict withdrawal limit – The maximum you can withdraw is $50,000 (including associated earnings) which may not be enough to cover a standard 20% deposit and other costs. Consider crunching the numbers early in the process so you know how much you’ll need upfront and how much you’ll need to save outside of super.
- Strict time limit – You must use your FHSS funds to purchase a home within 12 months of release. If you don’t, you must either recontribute the funds back to your super or keep the funds and pay an FHSS tax of 20%.
- Access – Funds may not be as easily accessible through your super as they are by other means such as a savings account so it’s important to consider whether making extra contributions to use the scheme is right for you.
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- Potential tax savings – You could save money on taxes, compared to saving outside of super (that may be subject to your marginal tax rate), which can help boost your deposit savings
- Saving discipline – Unlike your bank account, where your funds are easily accessible, you generally can't withdraw your super whenever you want, as there are ‘strict conditions of release’. Think of it as forced savings that may even generate potential returns. It can be especially useful for those who find it hard not to dip into their savings.
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- Complex rules – Under the FHSS scheme, specific rules apply to when, what, and how much you can withdraw. Separately, there are also limits on how much you can contribute to your super. These rules can be tricky to navigate so it’s important to check the rules early on, and well before you sign a contract to buy a home with the expectation of withdrawing funds through the FHSS.
- Strict withdrawal limit – The maximum you can withdraw is $50,000 (including associated earnings) which may not be enough to cover a standard 20% deposit and other costs. Consider crunching the numbers early in the process so you know how much you’ll need upfront and how much you’ll need to save outside of super.
- Strict time limit – You must use your FHSS funds to purchase a home within 12 months of release. If you don’t, you must either recontribute the funds back to your super or keep the funds and pay an FHSS tax of 20%.
- Access – Funds may not be as easily accessible through your super as they are by other means such as a savings account so it’s important to consider whether making extra contributions to use the scheme is right for you.
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Make sure you check your contribution caps as the government limits how much you can contribute. If you contribute too much, you may have to pay extra tax. Learn more about contribution caps on the ATO website.
Can I use super to help buy a home with another person?
Yes, if you’re buying your first home with another person and you’re both eligible, you can both take advantage of the FHSS scheme. This would double your total cap from $50,000 to $100,000. You’ll each build up your FHSS-eligible contributions in your own super accounts.
What is the step-by-step process of using super to help buy my first home?
Here’s a step-by-step process of using the FHSS scheme to help buy a home.
- Make sure you’re eligible for the FHSS scheme and that using the scheme is right for you. Speak to a licensed financial adviser if you have any questions.
- If you’re eligible and have done your research, start making voluntary super contributions.
- Keep checking how much you have saved for the scheme to help you keep track of the maximum FHSS amounts you can release.
- Ask the ATO for a determination where they’ll tell you the maximum amount that can be released. You can do this online using your myGov account linked to the ATO. This can be done multiple times.
- When you’re ready, you can request the ATO to release the amount, again using your ATO-linked myGov account. This can only be done once.
- You can now enter into a contract to buy or build your home. You’ll need to do this within 12 months from the date you make a valid release request to the ATO (you can apply for an extension).
- You can also enter into a contract before you apply to the ATO for release of your super, as long as you already have a determination from the ATO, and you make a release request within 14 days of entering into the contract.
- The ATO will ask your super fund to take that amount from your super account and send it to the ATO.
- When the ATO receives the amount from your super fund, they will take out the right amount of tax and pay the balance to you, directly into your bank account (it’s a good idea to double check your bank account details in myGov before requesting a release). The ATO estimates this will take 15-25 business days, which you should factor into your buying timeline.
Other requirements
There are additional requirements you must meet around the property you buy using the FHSS scheme. You must:
- live in the property as soon as practicable and for at least six months within the first year of owning it
- use funds from the FHSS scheme to buy a property in Australia only
Do I get taxed if I withdraw my super to buy a home?
Eligible after-tax contributions are released to you tax-free. Eligible before-tax contributions and associated earnings are taxed at your marginal tax rate, less a 30% tax offset. If the ATO doesn’t know your marginal rate, they’ll apply a 17% tax rate.
The ATO will withhold tax on the released amount. They’ll send you a payment summary at the end of the financial year showing how much super was released to you so you can complete your tax return.
Step into your guide to the FHSS scheme
Want more on the FHSS scheme? Dive into our handy guide, packed with plenty of information on eligibility, withdrawal limits, and FAQs. Plus, we’ll show you how to use the FHSS scheme, step-by-step. What’s more, it’s free to download.
Any tax related information in this article is general information only. You should seek advice from a registered tax professional if you intend to rely on the information.
