Saving a deposit can feel like the hardest part of buying a first home in Australia.
But there is a government scheme that lets eligible first home buyers put some voluntary super contributions towards their deposit, potentially giving their home-buying fund a significant boost.
The First Home Super Saver (FHSS) scheme allows eligible Australians to make extra contributions into super and later withdraw some of those contributions, plus associated earnings, to help buy or build their first home.
It sounds simple.
The rules, however, matter.
How does the First Home Super Saver scheme work?
The FHSS scheme essentially lets eligible first home buyers use the tax treatment of super to help build a house deposit.
You make voluntary contributions into your super fund while you’re saving.
Later, you can apply to the Australian Taxation Office (ATO) to have eligible amounts released for your home purchase.
The contributions can be:
- Salary sacrifice contributions made before tax.
- Personal contributions you claim, or intend to claim, as a tax deduction.
- Personal after-tax contributions that you don’t claim as a deduction.
The money isn’t held in a separate “first home” account inside your super fund. It remains part of your normal super balance, with the ATO calculating which contributions are eligible when you apply.
How much can you put into the FHSS scheme?
There are two major limits to remember.
You can have a maximum of $15,000 of voluntary contributions counted towards FHSS in any one financial year.
Across all financial years, the maximum amount of contributions that can count is $50,000.
That doesn’t necessarily mean you’ll receive $50,000 in cash.
The amount you can actually withdraw depends on the type of contribution and the associated earnings calculated under the scheme.
For eligible contributions, the ATO allows:
- 100% of eligible non-concessional contributions, after-tax contributions where you haven’t claimed a deduction.
- 85% of eligible concessional contributions, such as salary sacrifice or deductible personal contributions.
- Associated earnings calculated under the FHSS rules.
So someone who contributes $50,000 over several years won’t necessarily have $50,000 available to withdraw.
Why can super help you save?
The attraction is largely tax-related.
Concessional super contributions are generally taxed at 15% within the super fund, rather than being taxed at your ordinary marginal income tax rate.
FHSS amounts that are assessable when released also receive a 30% tax offset.
That can make the arrangement useful for some people who are saving for a home while working.
But it isn’t automatically the best option for everyone.
Putting extra money into super means locking it into the super system until it can be released under an applicable condition, unless you qualify for a specific scheme such as FHSS.
There can also be implications for your tax, super fund fees and insurance arrangements.
Who is eligible for FHSS?
The basic eligibility rules are important.
You generally need to:
- Be 18 or older when requesting an FHSS determination.
- Be a first home buyer who has never previously owned property in Australia.
- Have your name on the title of the property you purchase.
- Have eligible voluntary contributions available.
- Not have a completed FHSS release request that prevents you from using the scheme again.
The property ownership test is broader than simply asking whether you’ve previously owned a house.
For FHSS purposes, previous ownership can include an investment property, vacant land, commercial property, a lease of land or certain other interests in Australian real property.
There is an exception for people who previously owned property but subsequently lost their property interests because of recognised financial hardship.
Can couples both use the scheme?
Yes, FHSS eligibility is assessed individually, rather than jointly.
That means two eligible people buying the same property can potentially each use their own eligible FHSS contributions.
One partner having previously owned property doesn’t automatically prevent the other partner from using FHSS if the other person independently satisfies the eligibility requirements.
Can you use FHSS for any property?
No, The scheme is intended for a residential property that you genuinely intend to live in.
You must intend to occupy the property as your home as soon as practicable and generally live in it for at least six of the first 12 months when it is practicable to occupy it.
FHSS cannot be used to buy things such as:
- Vacant land on its own.
- A houseboat.
- A motor home.
- Premises that aren’t capable of being occupied as a residence.
There are separate rules for constructing a home on vacant land.
The deadline first home buyers really need to know
This is one of the most important parts of the scheme.
You need an FHSS determination before ownership of the property transfers to you.
In practical terms, that generally means getting the determination before settlement.
You can request a determination before signing a property contract, and under the current rules you can also request a release in certain circumstances after signing a contract.
For determinations made from 15 September 2024, a release request can generally be made up to 90 days after signing a contract.
The key point is that you shouldn’t wait until settlement and then try to sort out FHSS.
How do you withdraw the money?
There are several steps.
Step 1: Request an FHSS determination
Log into ATO online services through myGov and select:
Super → Manage → First home saver
The ATO will calculate your maximum FHSS release amount based on your eligible contributions and associated earnings.
Check the information carefully before proceeding.
Step 2: Request the release
Once you have your determination, you can request the release of an amount up to the maximum shown.
You’ll nominate the relevant super fund or funds and the bank account where the money should be paid.
Importantly, you can only submit one FHSS release request, so you need to be careful about the total amount you request.
Step 3: Buy or build your home
For a determination made from 15 September 2024, you generally need to sign a contract to purchase or construct a home within the required period.
The window begins 90 days before your release request and runs for 12 months after the request, subject to extensions allowed by the ATO.
An extension can potentially take the period to as much as 24 months after the release request.
Step 4: Tell the ATO what happened
If you sign a contract, you generally need to notify the ATO within 90 days of signing it for determinations made from 15 September 2024.
The notification is made through ATO online services.
How long does the money take to arrive?
Don’t assume the money will appear instantly.
The ATO says it will generally take 15 to 20 business days for the release process to be completed and the money paid to you.
That’s important when you’re planning a property purchase, particularly if you’re working around a contract or settlement deadline.
What tax do you pay when you withdraw FHSS money?
The tax treatment depends on what was released.
The assessable FHSS released amount includes the relevant concessional contributions and associated earnings.
The ATO withholds tax when the money is released, based on the applicable withholding rules.
You then report the relevant figures in the tax return for the financial year in which you request the release, which isn’t necessarily the year in which the cash reaches your bank account.
The 30% FHSS tax offset is taken into account when your final tax position is calculated.
What happens if you change your mind?
This is where the rules can become expensive if you don’t follow them.
If you release FHSS money but don’t ultimately buy or build an eligible home, you generally have two options within the applicable timeframe:
Recontribute the required amount to super, or Keep the money and pay FHSS tax.
The FHSS tax is calculated at 20% of the assessable FHSS released amount.
For example, if $20,000 of your released amount is assessable, the FHSS tax could be $4,000 if you choose to keep the money rather than meet the scheme’s requirements.
That’s separate from the ordinary tax treatment of the FHSS release.
Can you use FHSS if you’ve previously owned a home?
Usually, previous property ownership makes you ineligible.
But there is an important hardship exception.
Someone who previously owned property may potentially qualify if they have lost ownership of their property interests because of circumstances such as:
- Bankruptcy.
- Divorce or relationship breakdown.
- Loss of employment.
- Serious illness.
- Natural disaster.
The ATO must determine that the relevant financial hardship caused the loss of the property.
People in this situation should apply for a hardship determination before starting to make contributions under the FHSS scheme.
What are the pros and cons of FHSS?
The potential advantages
Tax benefits: Concessional contributions can receive the lower super tax treatment, subject to the applicable rules.
A structured way to save: Money contributed for FHSS purposes remains within super rather than sitting in an ordinary savings account.
Investment earnings: The scheme includes associated earnings in the amount that can be released.
Couples can potentially combine their individual FHSS amounts: Eligibility is assessed separately for each person.
The potential downsides
There are strict limits: Only $15,000 of voluntary contributions per financial year and $50,000 across all years can count towards FHSS.
Not all contributions qualify: Ordinary compulsory employer super contributions aren’t eligible.
The money isn’t completely flexible: Once released, you need to meet the scheme’s home-purchase or recontribution requirements.
Timing matters: Missing the relevant deadlines can trigger additional FHSS tax.
Your super fund matters: Fees, charges and insurance arrangements may be affected when you make additional contributions.
Is the First Home Super Saver scheme worth it?
For an eligible first home buyer with enough income to make voluntary super contributions, FHSS can be a useful way of building a deposit while taking advantage of super’s tax treatment.
But it isn’t simply “free money from your super”.
There are contribution limits, eligibility tests, tax rules and strict deadlines.
The biggest mistake would be treating the scheme like an ordinary savings account and assuming you can withdraw the money whenever you want.
Before making extra contributions, check your eligibility, confirm your super fund can process FHSS releases and understand the tax consequences.
And when you’re ready to buy, get the FHSS determination at the right time, before ownership of the property transfers to you.
For detailed eligibility and release calculations, the ATO’s FHSS guidance should be treated as the source of truth.