TIME TO BECOME A FIRST HOME SUPER SAVER!
First Home Super Savers Scheme
The average house price according to real estate.com in Shepparton is $340,000. If you’re looking to build a new home, costs could start from $350,000 to $400,000.
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 $340,000, this means you should be aiming for $68,000 as a deposit, plus associated costs of up to $10,000.
The government introduced a scheme from 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 into your Superannuation Fund (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Contributions and deemed earnings, net of tax, can be withdrawn from 1 July 2018.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 3.01%). 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?
Let’s meet 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, he could potentially save an additional $5,927 compared to if he contributed the savings in a bank account.
Annual salary sacrifice
FHSS Amount available for deposit (post-tax)
|Standard savings in a bank account (post-tax) interest rate 0.3%||$6,456||$12,962||$19,484|
Increase in deposit size, compared to savings account
Beware the restrictions
You must apply for and receive a FHSS determination from the ATO before signing a contract for your first home or applying for the release of your FHSS amounts. You can sign a contract to purchase or construct your home either:
- from the date you make a valid request to release your FHSS amounts
- up to 14 days before you make a valid request to release your FHSS amounts
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. You can contact an OzPlan advisor on 03 5821 9177.
For more information about what it takes to buy your first home, click the link below to download our FREE First Home Buyers eBook
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