Superannuation is typically available once you’ve retired. However, you can also use it to purchase your first home through the First Home Super Saver Scheme. Before using your super for a home purchase, you must make voluntary contributions in addition to your mandatory super. Let’s look at what the scheme is and how you can use it to purchase your first home.
Understanding the First Home Super Saver Scheme
The First Home Super Saver Scheme (FHSS) gives Australians the opportunity to save towards their first home through the superannuation plan. With this scheme, you deposit an extra amount to your regular mandatory super deposit. This allows you to withdraw a maximum of $15,000 in a financial year and a maximum of $50,000 across all years towards buying your first home.
To use your super as a first-home deposit, you must meet the eligibility criteria:
- You must be aged at least 18 years
- You must never have owned a home or investment property in Australia (you might still be eligible if you lost your home to special circumstances like divorce)
- You have not previously tried to use super for a first-home deposit (this requirement may change with the changes set to occur from September 15, 2024).
- You intend to live in the home for a minimum of six months in the first 12 months of purchasing the house
- You deposit voluntary contributions to your super
Applying for Superannuation for Your First Home
If you are buying a home together with your spouse, both of you can access your superannuation. Each one will contribute voluntarily to the scheme, and you can withdraw a cumulative maximum of $100,000 to use towards your first home purchase. Both of you must meet the FHSS scheme requirements.
Here are the steps to follow to buy your first home using your super:
Request a Determination
Request a FHSS determination from the Australian Tax Office. This determination allows the tax office to determine how much money you have contributed voluntarily to your super. You will need your superannuation statement to provide the correct dates and amounts of your voluntary contributions.
Request the Release of Your Savings
You can only request a release once. Therefore, ensure that you have made all the contributions you wanted and entered the correct information in your request for determination.
If you have, submit your request for release and wait for your savings to be released. The process takes up to 20 business days.
Your money will be released less the taxation owed and any other debts to the ATO and other commonwealth government agencies.
Purchasing Your Home and Notifying the ATO
Once you receive your funds, you have 12 months to purchase a home and report to the Australian Tax Office. The property you purchase must strictly be residential, and your name must be on the deed of the home.
You must live within the home for a minimum of six months in the first 12 months after purchasing it. If you haven’t signed a contract for a home within the first twelve months, you can request a 12-month extension. If you don’t buy a home, you will be required to recontribute the money to your super or pay additional tax on the funds.
Once you sign a contract for a home, you must notify the ATO within 28 days.
Making extra contributions to your mandatory super can be the first step towards your home ownership journey. You can make these contributions regularly as part of your plan before requesting a release towards your home purchase. Using your superannuation to buy a home is a great approach if you’re looking for the stability of homeownership.