Using your super to get into your first home sooner

The great Australian dream of breaking into the property market is getting tougher.

House prices continue to grow faster than increases to income levels, meaning saving for a home deposit and entering the housing market is getting harder and harder. 

Last year, to make things easier for young Australians, the Federal Government introduced the First Home Super Saver Scheme. Under the scheme, first home buyers can use voluntary or personal contributions that you make into your super fund as a deposit for their first home.

Why use your super? Why not just save?

The benefit of using your super to save for a house deposit is that you can pay less tax. The 15% tax rate that applies is lower than your normal tax rate  - this means you can build a deposit more quickly than you would outside of super in a normal savings account. It's also not as easy to access, so you're guaranteed it'll be put aside until you're ready to buy a home.

How does it work?

To take advantage of the First Home Super Saver Scheme, you need to make voluntary contributions of up to $15,000 per financial year to your Super account, up to a maximum of $30,000. These contributions and investment earnings are taxed up to 15%. The voluntary contributions can either be pre-tax (concessional) or post-tax (non-concessional) contributions. This is on top of the super your employer contributes.

If you're a couple, the maximum amount you can save doubles - you can each contribute up to $15,000 per financial year, up to $30,000 in total, so you can save up to $60,000 as a couple. 

Contributions under this scheme must be made within existing contribution caps; that is, the amount you put into your super between your voluntary contributions and the amount your employer contributes. Find out more about contribution caps.

How do I access the money I have saved in my super?

When you're ready to buy your first home, you need to apply directly to the Australian Tax Office (ATO) from 1 July 2018 to withdraw your deposit.

You can withdraw up to $30,000 of your contributions, minus any applicable contributions tax, plus any associated earnings.

It is important to remember, you can only receive one payment under the First Home Super Saver Scheme.

General eligibility

To be eligible to make contributions and withdrawals from the First Home Super Saver Scheme, you must:

• Be over 18 at the time you apply to withdraw your deposit from super (although you can start contributing at any age);
• Have never owned a home or investment property in Australia before;
• Use your deposit on a fixed residential property and plan to live there for at least 6 months of your first 12 months after purchase; and
• Not have withdrawn money under the First Home Super Saver Scheme before.

Want to move into your first home faster?

Start contributing to your super today.

Voluntary contributions to your super account made after 1 July 2017 are eligible to be withdrawn from 1 July 2018. If you're thinking about buying a house in the next couple of years, now is the time to start contributing to your super to take advantage of this initiative.

To see how much more you can save for a house deposit inside your super, visit the Government’s online estimator.

For more detailed information on the scheme, please visit the ATO website.

For more information on using your super to buy your first home, talk to our Financial Planning team or a lending specialist today.

This article has been written by WA Super.

Disclaimer

The information in this document is general information only and doesn’t take into account your personal financial situation or needs. You may wish to consult a licensed financial adviser to obtain financial advice that is tailored to suit your personal circumstances.

You should consider the Product Disclosure Statement relating to the financial product and consult your financial adviser before making a decision about whether to acquire, hold or dispose of a financial product. WA Super’s PDS is available at wasuper.com.au/pds.

WA Local Government Superannuation Plan Pty Ltd ABN 64 066 797 162, AFSL 269006, as Trustee for WA Local Government Superannuation Plan ABN 18 159 499 614