With the prices of houses going up each year, buying your ideal home sounds almost impossible. However, to help you make this possible, the Australian Government has a scheme called FHSS or First Some Super Saver Scheme.
This scheme is beneficial for people who wish to buy their first-ever home, but you must meet the eligibility criteria set by the ATO. Here in this guide, you will figure out if the FHSS scheme is worth it.
How does the FHSS scheme work?
The FHSS scheme lets you voluntarily contribute to your super, and when the time comes, withdraw this amount to buy your first-ever home. Currently, your contribution to your super should not exceed $15,000 annually. Simply put, only $15,000 will be counted towards the FHSS scheme even if you contribute more than this amount to your super.
Through this scheme, the total amount one can save is up to $50,000. The employer also puts in the superannuation guarantee amounts, so you have to ensure that these contributions do not exceed annual contribution limits. This limit is $27,500 per financial year for any concessional contributions.
Regarding eligibility, the ATO has laid out some strict criteria. If you wish to enjoy the FHSS scheme’s benefits, pay attention to the following requirements.
- You must have never had a property under your name in the country. However, you will be eligible for this scheme if you show you had to go through financial hardship. The financial hardship can be on one of the following grounds:
- Lost your job
- Affected by a natural calamity
- Eligible to access your super early
- You have to be at least 18 years old or above.
- You have not used this scheme before. A person can use this scheme only once, i.e., only one withdrawal from super for the purpose of buying a house is possible.
- You must live or intend to live in the property you purchase as soon as possible after you buy it.
- The property must be a residential one and must be in Australia. Thus, a shop, a houseboat or any other form of non-residential property cannot be purchased under this scheme.
Benefits of the FHSS scheme
Here are the benefits one gets to enjoy with FHSS or first home super saver scheme:
The major advantage is that you can save on taxes. How? Under this scheme, you are paying the lower super tax, which currently is 15%, rather than paying your usual income tax, which is as high as 45% for some individuals. If you are sceptical of the amount of tax you have to pay, you should ask your tax accountant to know better about it.
You can purchase a house with another person who may already be a homeowner and does not qualify for FHSS. It is because the eligibility of the FHSS scheme is based on an individual.
Another benefit of the FHSS scheme is that you can save for your first home’s deposit faster.
Is the First Home Super Saver scheme worth it? This is absolutely worth it for those looking forward to purchasing a home for themselves or their family. Although the amount itself may not be enough to buy the whole property, it would greatly help. To know more about the FHSS scheme, contact the Clear Tax team.
Disclaimer: The information on this website is for general purposes only and should not be relied upon for making legal or other decisions. The advice provided in this article is general in nature and is not subject to the personal financial situation and needs of any individual. Clear Tax tries to keep the information accurate and up-to-date; however, you should bear in mind with changing circumstances, the accuracy and reliability of the information will not necessarily remain the same. The information is by no means a substitute for financial advice.