First Home Super Saver Scheme (FHSSS)

Saving a deposit is often the biggest challenge facing aspiring homeowners. Between rising property prices, rent, childcare costs and everyday living expenses, building a substantial deposit can take years.

The Australian Government's First Home Super Saver Scheme (FHSSS) was designed to help first home buyers save faster by using the tax advantages of superannuation. While it doesn't provide a grant or free money, it can help eligible buyers accumulate a deposit more efficiently and potentially save thousands in tax along the way. 

If you're planning to build your first home, here's everything you need to know.

What Is the First Home Super Saver Scheme?

The First Home Super Saver Scheme allows eligible Australians to make voluntary contributions into their superannuation fund and later withdraw those contributions, along with associated earnings, to help purchase or build their first home.

The scheme was introduced to take advantage of the concessional tax environment within super, allowing buyers to grow their savings more efficiently than they might through a standard savings account. 

Unlike some other first home buyer initiatives:

• It is not a grant.
• It is not a government loan.
• It does not replace your home deposit.
• It is a tax-effective way to save your deposit. 

How Does the FHSSS Work?

The process is relatively simple.

Step 1: Make Voluntary Contributions

You contribute extra money into your super through:

• Salary sacrifice contributions
• Personal deductible contributions
• Personal after-tax contributions 

Step 2: Build Your Savings

Because super contributions are generally taxed more favourably than employment income, more of your money can remain invested and working for you. 

Step 3: Apply for an FHSS Determination

When you're ready to buy or build, you request an FHSS determination from the Australian Taxation Office (ATO) to calculate how much can be released.

Step 4: Request Release of Funds. 

The ATO then authorises the release of eligible contributions and associated earnings from your super fund. 

Step 5: Purchase or Build Your Home

Once funds are released, you generally have 12 months to sign a contract to purchase or build a home. 

How Much Can You Contribute?

Current FHSSS contribution limits allow you to contribute:

• Up to $15,000 per financial year
• Up to $50,000 in total across all years [ato.gov.au]

These contributions must be voluntary. Importantly, your employer's compulsory Super Guarantee contributions do not count towards the amount you can withdraw under the scheme. 

For couples, each eligible buyer can participate separately.

This means a couple could potentially access:

• Up to $50,000 each
• Up to $100,000 combined, plus associated earnings 

For many home-building couples, this can form a substantial portion of the required deposit.

How Much Can You Withdraw?

When eligible, you may be able to withdraw:

• Up to 100% of eligible non-concessional contributions
• Up to 85% of eligible concessional contributions
• Associated earnings calculated by the ATO [ato.gov.au]

The maximum releasable amount is based on the eligible contributions and earnings accumulated under the scheme.

What Is the Tax Benefit?

The main advantage of the FHSSS is tax efficiency.

Ordinarily, savings are accumulated from after-tax income. Under the scheme, concessional super contributions are typically taxed at 15% within the super environment. 

For many Australians, this is significantly lower than their marginal income tax rate.

This means:

• More money is retained from each contribution.
• Savings can potentially grow faster.
• Buyers may accumulate a larger deposit over time. 

For many first home buyers, the tax savings can amount to thousands of dollars over several years. 

Who Is Eligible?

To access the FHSSS, you generally must:

• Be at least 18 years old.
• Intend to live in the property.
• Be purchasing or building residential property in Australia.
• Not have previously owned property, unless specific exceptions apply. 

The ATO assesses eligibility when you apply for a determination and release request. 

Can You Use It to Build a Home?

Yes. The FHSSS can be used when:

• Purchasing land and building.
• Signing a building contract.
• Purchasing a newly built home.

This flexibility makes it particularly valuable for buyers planning a house-and-land package or custom home build.

Disclaimer: This article is general information only and does not constitute financial or tax advice. Rules, contribution caps and eligibility requirements may change. Always consult the ATO, your super fund, financial adviser or mortgage broker before making decisions relating to the First Home Super Saver Scheme. For further information please visit: https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/early-access-to-super/first-home-super-saver-scheme