First home buyers get a real boost
FHSS Scheme – first things first
Deciding to buy your first home is really exciting. There are so many decisions to make about where you want to live, what sort of home you’d like to buy and of course, how you’re going to afford it all.
To start, it’s important to work out how much you’ll need for your deposit in the first place, so you’ll have to do the maths.
- Work out how much you need to buy the property you’re interested in – don’t forget to factor in all related fees and charges including things like stamp duty and conveyancing fees
- Take away the amount you can afford to borrow
- Equals the deposit you’ll need to save.
It all sounds pretty straightforward, but saving the deposit for your first home isn’t as easy as a simple equation. It can be much harder.
Some people try to boost their savings by taking a second job, selling things they no longer want or need or even starting a side hustle.
Many more move back in with their parents to save on rent and other expenses and others budget around the clock so they can sign their very own Contract of Sale sooner rather than later.
That’s why the Australian Government’s first home super saver scheme (FHSS) is such a great idea.
This initiative lets you make extra contributions to your superannuation and use those funds to buy your first home sooner. By contributing to your superannuation, you can save on the amount of tax you need to pay annually, which is extra money you could be putting into your deposit.
Anyone earning more than $18,200 per year can save on tax while being part of this scheme.
Are you eligible?
To access this scheme:
- You must be 18 or older
- You cannot have accessed this scheme in the past
- You must not have owned property in Australia before.
There are a number of other eligibility criteria. For example, the FHSS scheme will only be available to you if:
- You live in the premises you are buying, or intend to as soon as practicable
- You intend to live in the property for at least six months, within the first 12 months you own it, after it’s practical to move in.
Only voluntary contribution funds can be accessed as part of this scheme and withdrawals are currently limited to:
- $15,000 per financial year
- $30,000 in total.
Although the FHSS scheme might not be the most straightforward way to save for a house, it can help you save at tax time and boost your deposit.
Your accountant would probably argue that right now, this is the most tax effective way of saving for a home deposit.
If you’d like more information about the FHSS scheme, visit the Australian Tax Office website here for everything you need to know.