First Time ‘Super’ Entry into the Property Market
We all know how hard it is for Australians to buy their first property and saving for a deposit seems like an impossible task. This is where your superannuation might be able to make what seems like the unachievable to be achievable.
The First Home Super Saver (FHSS) Scheme was developed by the Australian Government to help first home buyers get a foothold in the property market sooner. But did you know the FHSS scheme allows you to save money for your first home inside your super fund? If you are a first home buyer, this will help you save faster.
The Rules: What You Need to Know
Under the scheme, as a single person you can contribute extra money into your super (up to $15,000 per financial year). The maximum you can contribute towards the FHSS is $30,000 per person. You can then withdraw these amounts (in addition to associated earnings/less tax) from your super fund to help with a deposit for your first home. As a couple, you could potentially put a total of $60,000 towards a first home deposit from your super. Does this sound like something you could benefit from?
Check your Eligibility for FHSS
To qualify for the first home super saver scheme, you must meet the following criteria:
- You must be 18 years or older to access your super contributions;
- You have never owned a property before, including an investment property;
- You cannot use your contribution to purchase a houseboat, motor home or vacant land; and,
- You can only make use of the scheme once.
You may still be eligible for the FHSS even if you have previously owned a property in Australia under the financial hardship provision. Visit the ATO website to learn more about this. In fact, because there are many rules around this scheme, we recommend you visit the ATO website for further details. Below is a brief outline of just some of the rules associated with this scheme.
- There are limits on how much you can save: The maximum amount per person you can contribute to super using the FHSS Scheme is $30,000.
- Each person has an annual contribution limit: Rules and limits for the FHSS apply to an individual, which means both members of a couple planning to buy their first home are eligible to use the scheme to save for a home deposit. The individual-based limits give couples the chance to save up to $60,000 using the scheme. However, they will still have to adhere to maximum contribution limits for concessional and non-concessional limits in their super or they may have to pay extra tax.
- Your super fund is not in charge: The ATO – not your super fund – decides what super contributions count towards the FHSS and the associated earnings. It then advises your super fund on the amount that can be released when you submit an application to withdraw your deposit savings.
- You can buy a property with someone else: You can still access your FHSS savings even if you purchase a house with someone who is not a first homebuyer and you want to buy your new family home in both names. Eligibility for the FHSS is assessed on an individual basis. This means couples, siblings or friends can each access their own eligible FHSS contributions to purchase the same property. If any of you have previously owned a home, it doesn’t prevent anyone else who is eligible from applying.
- What happens if I have accessed the FHSS but don’t buy a home? If you haven’t contracted to purchase or construct a home within 12 months of receiving the FHSS Scheme amounts, you can either apply for an extension of up to 12 months, put the same amount of money back into super less any tax withheld by the ATO, or keep the released amount and be subject to a FHSS Scheme tax.
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Disclaimer: In presenting this information REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation. Members should obtain and read the Product Disclosure Statement for REI Super before making any decisions and consider talking to a financial adviser before making an investment decision. Past performance is no indication of future performance.
This information has been prepared and published by REI Superannuation Fund Pty Ltd ABN 68 056 044 770 RSE L0000314 AFSL 240569. REI Super ABN 76 641 658 449 and RSE R1000412 MySuper unique identifier 76641658449129 for the general information of members of REI Super. Although REI Super makes every reasonable effort to maintain current and accurate information, you should be aware that there is still the possibility of inadvertent errors and technical inaccuracies. The REI Super Helpline and the REI Super website are provided by Mercer Outsourcing (Australia) Pty Ltd ABN 83 068 908 912 and Mercer Financial Advice (Australia) Pty Ltd (MFA) ABN 76 153 168 293, Australian Financial Services Licence (AFSL) #411766. September 2020