CAN I USE MY SUPER TO BUY MY FIRST HOME?

Yes, you can, but many people have not even heard of this, let alone taken advantage of it to become a First Home Owner.  As mortgage brokers, we have been surprised that there have been very few clients using the scheme to get their deposit funds together.

There are a number of ways to save up for a home deposit, but one method that many people are not aware of that could be really helpful, is the First Home Super Saver Scheme.  Here’s a quick rundown on how the scheme works.

What is the First Home Super Saver Scheme? (FHSSS)

The First Home Super Saver Scheme was introduced in 2017 to help first home buyers save up for a loan deposit.  Under this scheme:

• You can make voluntary contributions of up to $30,000 for a home loan deposit for your first home purchase.
• The maximum voluntary contribution available is $15,000 per financial year.
• The contributions need to be different from employer contributions.
• By making pre-tax voluntary salary contributions, your contribution will be taxed at a lower rate (when compared with your regular salary) allowing you to save up for a home loan deposit much quicker because you end up with more money in your hands than if you didn’t use the scheme.

Eligibility Criteria

• You need to be over 18 years of age. This is the same for anyone buying property in Australia.
• You should have never owned property in Australia before.  This would make you ineligible.
• You are a first-time applicant (this means that if you are purchasing a property with a partner who has owned property before, but you are a first home buyer you are still eligible).
• You need to live in the property for at least six months within the first twelve months of purchase.

How Do I Access The Scheme?

• Start making voluntary contributions to your super fund.
• Once you’re ready to make the purchase, apply to ATO (Australian Taxation Office) for the funds to be released using the MyGov app.
• Apply for the funds before or after signing the purchase contract as you have 12 months to use the funds.  You can’t put the money back if you don’t go ahead with a purchase.
• Notify the ATO within 28 days of purchasing the property.

Situations Where The Scheme May Not Be Of Benefit To You

• The most important benefit of the scheme is the tax saving it offers.  Pre-tax salary contributions are taxed at a lower rate, so in cases where a person is paying a lower amount of tax in the first place, the benefit of the scheme might not be of much assistance.
• There is limited flexibility in terms of use of the savings amount.  An important point to be aware of is that if an individual decides not to use the funds for property purchase, you cannot use the funds until retirement.

Things To Keep In Mind

• Check on how easily your super fund will release the amount post-ATO approval to do this.  Having the funds available for settlement purposes etc. will be MOST important.
• Get a clear understanding of the processing fees involved.
• The maximum benefit derived from the scheme is through pre-tax salary sacrifice.  Some employers do not have provisions for this.  In case you plan on making pre-tax salary contributions, check if your employer allows for this.

While the scheme is indeed an effective way to save up for a first home loan deposit quicker, it’s best to seek professional advice to understand if it suits your specific circumstances.  As mentioned earlier, if you are not going to benefit much in terms of tax savings, you would be best to look at other options.

Feel free to make contact with us here at Living Home Loans so we can be of assistance for all of your finance questions and needs.

Have you got a dream?

Have you got a vision to own property that we can help you with?

Give us a call on 0439 110 255 or contact us today for an appointment.