How the First Home Super Saver Scheme Works

For many Australians, saving for a first home deposit is one of life’s most challenging financial milestones. Rising property prices, inflation, and everyday living costs can make it difficult to build a deposit fast enough. That’s where the First Home Super Saver (FHSS) scheme comes in — offering a tax-effective pathway to grow your deposit by using your superannuation account.

By tapping into the concessional tax environment of super, the FHSS scheme may help first-home buyers get into the property market sooner — and with less stress.

What Is the FHSS Scheme?

The First Home Super Saver scheme allows eligible first-home buyers to make voluntary contributions to their superannuation fund — either before-tax (concessional) or after-tax (non-concessional) — and later withdraw those contributions (plus deemed earnings) to put toward the purchase of their first home.

The most tax-effective approach is to make concessional contributions via salary sacrifice or personal contributions (with a tax deduction). These contributions are taxed at just 15% within super, which is likely lower than your marginal tax rate — allowing you to grow your deposit faster than in a regular savings account.

Who’s Eligible?

To use the FHSS scheme, you must:

• Be at least 18 years old
• Have never owned property in Australia (including residential, investment, or vacant land)
• Intend to live in the home for at least six months within the first 12 months of ownership

Note: Exceptions apply if you’ve suffered financial hardship, such as bankruptcy or divorce.

How Much Can You Contribute?

• You can contribute up to $15,000 per financial year under the scheme
• There’s a lifetime cap of $50,000 per person
• Couples can combine their contributions for up to $100,000 in total

Voluntary contributions must be within your existing concessional and non-concessional contribution caps. And remember, once the money is inside super, it’s locked away until you formally apply for release through the FHSS scheme.

What Can You Withdraw?

When you’re ready to buy, you can access:

• 85% of your concessional contributions (after the 15% contributions tax)
• Associated earnings based on a fixed ATO rate (currently 7.17%)
• Less tax at your marginal rate, offset by a 30% tax credit

Example:

Let’s say you contribute $50,000 over four years via salary sacrifice:

• You’ll be able to withdraw around $42,500, plus deemed earnings
• Final withdrawal amount depends on earnings and any applicable taxes at withdrawal

Using the FHSS Scheme – Step by Step

1. Request a Determination: Before buying, apply through the ATO to confirm how much you can withdraw
2. Apply for Release: After determination, request the funds (processing time: 15–25 business days)
3. Sign a Contract: You must buy or build within 12 months of receiving the funds
4. Missed Deadline? You may need to return the funds to super or pay additional tax

Important Considerations

• Not All Super Funds Participate: Check with your fund before making FHSS contributions
• Impact on Centrelink or Benefits: The withdrawal counts as assessable income, which may affect your entitlements in that year
• Vacant Land Rule: You can’t use FHSS for land-only purchases unless it includes a build contract

Maximising Your Deposit: Combine with Other Schemes

You may be able to combine FHSS savings with:

• The First Home Owner Grant (FHOG)
• The First Home Buyer Assistance Scheme (NSW)
• The Home Guarantee Scheme (to reduce or eliminate Lenders Mortgage Insurance)

Some lenders also waive LMI for professionals in medicine, law, or finance — another reason to talk to a mortgage broker.

Is the FHSS Right for You?

If you’re a disciplined saver looking to buy in the next few years, the FHSS scheme offers a unique opportunity to boost your deposit while saving on tax. It’s not a fast-cash solution, but with the right strategy, it could give you a significant head start.

Speak with your financial adviser, tax agent, or super fund before getting started to ensure the scheme suits your situation and goals. With careful planning, the FHSS could be your smartest step toward owning your first home — sooner than you thought possible.

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How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

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The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

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