FHSS Scheme: Boost First Home Savings with Tax Advantages

The First Home Super Saver (FHSS) scheme is a government initiative aimed at helping first-time homebuyers save for a deposit by making voluntary contributions to their superannuation accounts. This scheme offers tax concessions and a competitive interest rate, making it an attractive option for those looking to enter the property market.

Under the FHSS scheme, individuals can contribute up to $15,000 per financial year and $50,000 in total towards their first home. These contributions can be made through salary sacrifice, personal tax-deductible contributions, or non-concessional contributions. It’s important to note that only voluntary contributions made since 1 July 2017 are eligible for withdrawal under this scheme.

To be eligible for the FHSS scheme, individuals must be at least 18 years old and have never owned property in Australia. They must also intend to live in the property they purchase as their primary residence. Couples, siblings, or friends can each access their own contributions for purchasing the same property.

When it comes to withdrawing funds under the FHSS scheme, the taxable amount is subject to withholding tax at the individual’s marginal tax rate, less a 30% tax offset. This assessable amount includes both net concessional contributions and associated earnings on both concessional and non-concessional contributions. Non-concessional contributions are released tax-free.

It’s essential to apply for a FHSS determination through myGov before signing a contract to purchase a property. Once the determination is issued, individuals can request a release of their savings, which typically takes 15-20 business days to process. Failure to meet application deadlines may result in the savings remaining in the super account or incurring FHSS tax.

While the FHSS scheme offers significant benefits in terms of tax savings and interest earnings, there are some considerations to keep in mind. Factors such as changes in income tax brackets, Division 293 tax implications, potential impact on other government benefits, and the need for timely application submissions should be carefully evaluated before participating in the scheme.

Overall, the FHSS scheme can be a valuable tool for first homebuyers looking to boost their deposit savings through tax advantages and favorable interest rates. By understanding the rules and limitations of the scheme, individuals can make informed decisions to maximize the benefits of this initiative.