Using your super to help save for your first property

The First Home Super Saver Scheme allows you to save for your first home within your super, in a tax-effective way.

To help younger Australians access the housing market the Australian Government introduced the First Home Super Saver Scheme (FHSSS) in July 2017. This scheme allows people looking to purchase their first home to save within their super. When ready to purchase, homebuyers can withdraw those funds – along with the interest earned – to fund the purchase of their first home.

As super is typically only accessible once you reach retirement age there are a number of eligibility criteria and rules associated with the FHSSS to ensure it’s used for its intended purpose and that you’re not left short when it comes time to retire.

The First Home Super Saver Scheme eligibility criteria

The first step when considering whether the FHSSS is right for you is determining whether or not you meet the following eligibility criteria:

  1. be aged over 18 
  2. have not previously owned property in Australia
  3. intend to live in the property for at least six months of the first 12 months that you own it
  4. have not previously used the scheme before.

Using the First Home Super Save Scheme to save within super

Once you meet the eligibility criteria you can contribute additional pre-tax contributions such as salary sacrifice, subject to only 15% tax, which is well below the provisional tax rate most Australians pay. Alternatively, you can contribute after-tax contributions such as non-concessional contributions which are not subject to tax upon entry, as the money used has already been taxed.

When contributing towards the FHSSS you can contribute either pre-tax or post-tax contributions, or a mixture of both. However, you can only contribute up to $15,000 per financial year and withdraw a maximum of $50,000.

It’s also important to note any additional contributions you make that you intend to withdraw under the FHSSS will count towards your contributions caps – the amount you’re able to contribute to your super account each financial year. 

Withdrawing from your super

Once you’re ready to purchase your first home you can apply to the ATO via your MyGov account for a FHSSS release. The ATO will determine which contributions are valid under the FHSSS and will tell us how much can be released – typically you’ll be eligible to receive 85% of the before-tax contributions you’ve made, and 100% of the after-tax contributions. Any additional earnings you receive are also determined by the ATO. Once we receive confirmation from the ATO we’ll then release the funds from your account and send them to the ATO, who’ll pass them onto you.

Start saving today

If you want to take advantage of the FHSSS scheme to help buy your first home, you can start by setting up a salary sacrifice arrangement – simply complete our salary sacrifice form and return it to your employer. Alternatively, you can make non-concessional contributions. To make non-concessional contributions please use the BPAY details specific to your account – these can be found by logging into your account and navigating to the Personal Details page. 

Using your super to help purchase a home can be complex and may have tax implications. Depending on your personal circumstances the FHSSS may not be the ideal solution for you. Prior to adding to your super with the intention of withdrawing under the FHSSS we recommend seeking financial advice. As part of your membership, our Helpline Advice team can provide financial advice about your super fund at no additional cost. You can make an appointment with this team by calling our Helpline on 1800 682 525 between 8am-7pm (AEST/AEDT), Monday-Friday.

Disclaimer: This document has been prepared and sent on behalf of Mercer Superannuation (Australia) Limited (‘Mercer Super’), ABN 79 004 717 533, Australian Financial Services Licence #235906, the trustee of the Mercer Super Trust ABN 19 905 422 981. Any advice contained in this document is of a general nature only, and does not take into account the personal needs and circumstances of any particular individual. Prior to acting on any information contained in this document, you need to take into account your own financial circumstances. Please consider the Product Disclosure Statement, Product Guide, Insurance Guide, and Financial Services Guide before making a decision about the product, or seek professional advice from a licensed, or appropriately authorised financial adviser if you are unsure of what action to take. 'MERCER' is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917. Copyright 2022 Mercer LLC. All rights reserved.