IT’S TIME TO BECOME A FIRST HOME SUPER SAVER!
Uncategorized

IT’S TIME TO BECOME A FIRST HOME SUPER SAVER!

First Home Super Savers Scheme

The average house price in Shepparton is $273,000.

Unless you win the lotto or strike gold, this means you most likely need to get a mortgage. As a rule of thumb, a 20% deposit is a good starting point.

Using the above price of $273,000, this means you should be aiming for $54,600 as deposit. In other words, the equivalent of 3,640 smashed avo meals.

The government introduced a scheme in 1 July 2017 to help give your deposit a boost. This is known as the First Home Super Saver Scheme (FHSS). This allows individuals to make voluntary contributions of up to $15,000 per year (subject to super contribution caps) and $30,000 in total under the scheme. Couples can have a combined total of $60,000 which can be saved if you’re both eligible.

Contributions and deemed earnings, net of tax, can be withdrawn from 1 July 2018. Withdrawals made via before tax contributions will be taxed at your marginal tax rate less a 30% tax offset. The deemed earnings are set by the government (currently 4.96%). When the funds are drawn, this will be included in taxable income but will not flow through other income test such as HECS/HELP repayments.

So what difference can this make?

Below we have Bob. Bob has a taxable income of $70,000 per annum and would like to voluntarily contribute $10,000 towards his super fund for the FHSS. Over 3 years, old mate could potentially save an additional $6,210 compared to if he contributed the savings in a bank account.

First Home Super Saver Graph Data

Beware the restrictions

The above sounds great, but there are a few catches.

When the funds are released, there must be a contract to purchase a home or construct a new home within 12 months. Additionally, there needs to be a genuine intention to occupy the home. There can be complications if these rules are not adhered to.

If the rules are not followed, the funds must be contributed back towards super after tax. If you don’t contribute the funds back toward super, you will be subject to an additional tax of 20% of the released amount.

How can good advice help?

An adviser can sit down with you and help you come up with a plan to build your deposit. An adviser can assist by holding you accountable and developing strategies to keep your savings plan on track.

For more information about what it takes to buy your first home click the link below to download our FREE First Home Buyers eBook.

DOWNLOAD FREE eBook