A new scheme may help you make your dream of owning a home come true!!
Ongoing high property prices have made owning a home unattainable for lots of prospective first‑time home buyers. The First Home Super Saver scheme, passed by the Australian Government in December 2017, may help keep the dream of buying a first home alive and well.
The new scheme helps you save for your first home by allowing you to use the concessionally taxed superannuation environment to build your housing deposit. Eligible voluntary contributions are limited to $15,000 in any one financial year and $30,000 across all financial years. They include both voluntary concessional and voluntary non-concessional contributions.
You are able to withdraw these eligible contributions and associated earnings from 1 July 2018 to buy or build a first home. You may be allowed to withdraw 100% of eligible non-concessional contributions and 85% of eligible concessional contributions.
Are you eligible?
To have your contributions released, you must be at least 18 years of age and not have owned property in Australia previously, or have already asked the Commissioner of Taxation to release funds under the scheme. As a bonus, if you have owned property in the past, you may still qualify if the Commissioner determines that you have suffered a financial difficulty that led to the loss of your property.
The Australian Taxation Office (ATO) will assess eligibility to withdraw contributions on an individual basis. This basically means that you and your partner or a family member can each apply for a release of contributions to buy the same property!
Once your super fund releases your contributions, the Commissioner of Taxation will withhold tax. This will be calculated at your marginal tax rate less a 30% offset.
You have up to 12 months from the time you receive the first amount to sign a contract to buy or build a house. (But, if you still really need more time, you may apply for an extension of up to 12 months.)
Get advice too!
It’s important to seek professional advice before you consider making or withdrawing voluntary super contributions to buy your first home. Talk to your adviser to see how the scheme can work for you. Or we’d be happy to help walk you through it if you still have more questions.