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Saving for your first home? In a market where owning your home is out of reach for many, the First Home Super Saver (FHSS) scheme offers some practical hope, allowing you to take advantage of your super’s tax concessions to build up and then access your super savings.
The FHSS scheme is clearly for first home buyers – those who are buying or constructing their first home in Australia. But those buyers must be 18 years or older; have never owned a property in Australia; and only apply for the scheme once. However, there is provision for owners who have previously lost their property through financial hardship to be considered eligible for the scheme.
The scheme allows you to release up to $15,000 of voluntary contributions you’ve made (since 1 July 2017) to your super in any one financial year, and up to $30,000 in total, subject to contribution caps.
These can be concessional and non-concessional contributions and made by you or your employer (but exclude super guarantee contributions, among others).
Once you’ve saved the final amount and, before signing a contract to purchase your home or applying for the release of your FHSS funds, you must apply to the ATO and obtain an FHSS determination.
You can then make a valid request to the ATO to authorise your super fund to release an amount up to the maximum in the determination. It may take about 25 days to release the funds.
If eligible, you can enter into a contract to purchase or construct your home either as soon as you make the request to release the funds or up to 14 days before the date you make this request. You have up to 12 months after you’ve requested the release to sign a contract. Once signed, you must notify the ATO within 28 days that you have done so. And once you reach settlement, you are required to live in the home or intend to do so for at least six months within the first year of ownership.
If you decide not to go ahead with the purchase you must notify the ATO within 12 months of making the release request, and either take advantage of a further 12-month extension or recontribute an eligible amount back into super as a non-concessional contribution. Alternatively, if you fail to comply or decide to hang onto your FHSS released amounts they may be subject to 20% FHSS tax.
If this scheme is right for you, take care not to mess with the rules. We know the traps and can help guide you safely to your front door.