Can first home buyers tap into super to secure a first home?

Yes, you can and better still from 1 July 2018 you can apply to access any ‘voluntary contributions’ you have made to super since the start of this financial year, along with any investment earnings. You must be 18 years or over to apply for the release of these amounts.

The maximum amount you can contribute annually to your super account under the First Home Owner Super Saver Scheme (FHSSS) is $15,000, and up to $30,000 in total.

The rub is that all contributions to the scheme must be voluntary. This means the compulsory 9.5% paid to your super account by your employer can’t be put towards a deposit for a home. This seems like a missed opportunity as your employer contributions would allow many more first home buyers to turbocharge their savings for a property deposit. And by the way, any contributions and earnings you withdraw from super are taxed at 30%. What is acceptable to access are the extra salary sacrificed contributions that your employer pays on your behalf into super or any other additional after-tax contributions you might make that might come your way from a windfall such as a tax return or lottery win.

Let’s look at the benefits according to some numbers crunched by the government. We’ve assumed a first home buyer earns $70,000 a year and wants to buy a first property. Using salary sacrifice, she annually directs $6,000 of pre-tax income into her superannuation account.

After five years, she can withdraw $26,994 of contributions and any consequent earnings such as dividend or rental income. Her withdrawal is taxed at her marginal rate (including Medicare levy) less a 30 per cent offset. The first home buyer has saved around $6,992 more for a deposit than if she had saved in a standard deposit account using after tax dollars, according to government. To help you work out the benefits of the FHSSS, the government provides a ready reckoner calculator: at www.budget.gov.au/estimator.

To qualify for the FHSSS you must be a genuine first home buyer, who has not previously accessed funds from superannuation. You also must either live in, or intend to live in the premises as soon as possible to be eligible for the FHSS or intend to live in the property for at least six months of the first 12 months you own it, and after it is practical to move in. Also, you can’t access your super to buy commercial property, a houseboat, a motor home or vacant land.