First Home Super Saver Scheme
Can I use my super to buy my first home?
If you’re a first home buyer, you can use part of your super to help buy your first home. You can ask the Australian Taxation Office (ATO) to release up to $30,000, plus the associated earnings, of your voluntary after-tax contributions or salary sacrifice payments made after 1 July 2017, which can help with your deposit. The government has proposed that from 1 July 2022, this amount will increase to $50,000 plus associated earnings. This measure is not yet law.
It’s all through a government initiative called the First home super saver (FHSS) scheme.
Only superannuation contributed by you, such as personal voluntary after tax or salary sacrifice contributions can be used, not contributions made by your employer(s). You must also be an eligible first home buyer.
Before choosing to take up the scheme, it’s important to consider whether it is right for you or if saving up for a deposit in the more traditional sense – without using your superannuation contributions – is more appropriate. This article outlines the circumstances which may see you benefitting (or not) from taking up the scheme.
If you do choose to take up the scheme, once approved you can withdraw funds to use towards a deposit or the balance of your first home. Remember, you’ll need to show that you’re accessing your super from your account solely for the purpose of buying your home in Australia.
However, if you do take up the scheme and your application is rejected by the ATO, your contributions will usually remain in your super fund until you reach preservation age.
To be eligible, to apply to the ATO you must be:
- At least 18 years of age
- A first home owner who has never owned property or a share in any property, including land, investment property or commercial real estate (unless you have suffered financial hardship as determined by the ATO)
- A first-time applicant, who has not applied to take up the scheme before.
Since applications are based on each individual, you may still be eligible even if someone you’re buying the home with is not. For example, if you are a first homebuyer but your partner is not, you may still be able to access your own super contributions, even though your partner won’t be able to access theirs.
Steps - super and your first home.
Accessing your voluntary super contributions to put towards buying your home is easy.
Start by making voluntary contributions to your super account. It could be through pre-tax salary sacrificing or after-tax payment.
You don’t need to create a separate super account. Your contributions go straight into your existing super account and work for you there, while you’re saving up for the rest of your deposit. And because your payments are just normal voluntary contributions, you don’t even need to notify your super fund of your intentions.
Once you’re in a position to buy your first home, you simply apply to the ATO for a FHSS determination. The determination will let you know how much you are eligible to receive from your super account – up to a maximum amount of $30,000 of the voluntary contributions you have made plus any earnings on that amount. Once you have received your determination, you can apply to release the funds online via your MyGov account linked to the ATO. It’s important to at least have your determination prior to signing the contract to buy or build your new home. You can then apply for the release of your funds. Alternatively, you can apply for the release of your funds without having signed a contract - you then have 12 months from when you made a valid release request in which to sign the contract to buy or build your home.
The property purchased must be occupied as soon as practicable and be occupied for at least six months of the first year. The ATO also must be notified of these matters within 28 days of entering the contract.
If you choose to not use the money to buy your first home after it is released, you need to recontribute the amount back into your fund otherwise you will be taxed at a flat rate of 20% on the amount released.
If you need more information – or just reassurance – talk with a financial planner at your Industry SuperFund.