The Government introduced the First Home Superannuation Savings Scheme (FHSSS), within the 2017/18 Budget. Since that time, it has been further enhanced. The goal of the scheme is to reduce pressure on housing affordability and to provide a tax efficient mechanism for first time buyers to be able to save and then purchase their first home.

How does it work

An individual can contribute money to their superannuation fund and take advantage of the concessional taxation arrangements. That money can then be accessed and put towards the purchase of a new or existing home within Australia. In effect, the FHSSS is a tax strategy that ultimately means that more of your savings goes towards the purchase of your home and not to the tax man.

The detail

The rules associated with the scheme are complex. Some of the key things to know are listed below:

• You must meet eligibility conditions for the scheme.
• You cannot have owned any property (including land) within Australia previously.
• The amount that you can save into superannuation is capped ($15,000 per annum, or $50,000 in total across all years).
• Applicable superannuation contributions include salary sacrifice or personal voluntary contributions.
• You can withdraw up to $50,000 comprising 100% of any non-concessional contributions and 85% of any concessional contributions plus 100% of any deemed earnings.
• There is a very specific process to follow to allow you to withdraw the funds.

Please note that this list is not comprehensive. It is absolutely necessary to receive documented advice prior to adopting this strategy.

Summary

The FHSSS rules are particularly complex. However, complexity aside, it is a great option to consider for first home buyers looking to save to get onto the property ladder. Not only that, but it is also potentially a useful strategy for parents helping the next generation achieve their property goals. Contact W2 wealth for more information. We can help you prepare your strategy.