If you’ve been trying to save a deposit to purchase your first home, you know how long it can take to hit the all important finance requirements that are mandatory by many lenders. The Turnbull Government has given first home buyers a lifeline to use their superannuation fund to save for a house deposit through the First Home Super Saver Scheme.
The Scheme was passed through Parliament in early December and for first home buyers this means that they can stash cash using their super accounts while reaping significant tax benefits. The Turnbull Government said the Scheme would help make owning a home become a reality for many first home buyers who are squeezed out of the market.
It allows individuals to contribute up to $15,000 each financial year to their super above their compulsory contributions to a maximum of $30,000 and for couples they can contribute a combined $60,000 in total. These contributions, which are taxed at 15%, along with deemed earnings, can be withdrawn for a deposit.
Many employees will be able to take advantage of salary sacrifice arrangements to make pre-tax contributions to their superannuation fund. Individuals who are self-employed or whose employers do not offer salary sacrifice can claim a tax deduction on personal contributions, meaning savings effectively come out of their pre-tax income.
From July 1 2018, first home buyers can make withdrawals of the extra savings that they have tucked away in their superannuation accounts and use this to purchase property and finally enter the real estate market. The Government has estimated that most first home buyers would be able to grow their current savings by at least 30% using the First Home Super Saver Scheme.
The government has set up an online estimator so you can see how much you can save using pre-tax contributions to your superannuation account compared to after tax savings in a standard deposit account. Visit the Government budget estimator for more information.