First Home Super Saver Scheme Complete Guide 2025: Everything You Need to Know

Table of Contents

• What is the First Home Super Saver Scheme?
• Eligibility Requirements
• Contribution Limits and Types
• How to Apply
• Withdrawal Process
• Tax Implications
• Case Studies
• Common Mistakes to Avoid
• Frequently Asked Questions
• Official Resources

What is the First Home Super Saver Scheme?

The First Home Super Saver Scheme (FHSS) is an Australian Government initiative that allows first-time home buyers to save for their home deposit inside their superannuation fund. By doing so, you can take advantage of the concessional tax treatment of super to build your deposit faster.

Key Benefits

• Lower tax rate: Contributions are taxed at 15% instead of your marginal tax rate
• Tax-free growth: Investment earnings are generally tax-free
• Faster savings: Potential to save thousands in tax while building your deposit
• Flexibility: Can be used with existing super or new contributions

How Much Can You Save?

You can save up to $50,000 per person (or $100,000 for couples) through the scheme. Based on average scenarios:

• Single person: Could save $2,000-$8,000 in tax over 4 years
• Couple: Could save $4,000-$16,000 in tax over 4 years

Eligibility Requirements

Who Can Apply?

To be eligible for the FHSS scheme, you must:

✅ Never owned property: You must have never owned real property in Australia (with some exceptions) ✅ First home purchase: The property must be your first home ✅ Residence requirement: You must live in the home for at least 12 months after moving in ✅ Purchase timeframe: Must purchase within 12 months of first FHSS release

Property Requirements

The property you purchase must:

• Be residential property in Australia
• Be your principal place of residence
• Have a contract price under the relevant threshold for your area
• Meet any additional state/territory first home buyer requirements

Exceptions to “Never Owned Property”

You may still be eligible if you previously owned property but:

• It was through a divorce/separation settlement and you received less than a certain amount
• You owned property with someone under a statutory compensation scheme
• Other specific circumstances outlined by the ATO

Contribution Limits and Types

Annual Contribution Limits (2025)

Important: The $30,000 annual limit and $50,000 lifetime limit apply to the total of both concessional and non-concessional contributions.

Types of Contributions

1. Concessional Contributions

• Salary sacrifice: Reduce your salary to increase super contributions
• Personal deductible: Make personal contributions and claim a tax deduction
• Taxed at 15%: Instead of your marginal tax rate

2. Non-concessional Contributions

• After-tax contributions: From your take-home pay
• No immediate tax benefit: But earnings grow tax-free
• No contribution caps impact: Don’t count toward your regular non-concessional caps

Example Contribution Strategy

Scenario: Sarah earns $80,000 and wants to maximize FHSS benefits over 3 years.

Year 1-3: Contribute $15,000 annually via salary sacrifice

• Tax saved: Approximately $2,550 per year (15% vs 32.5% tax rate)
• Total after 3 years: $45,000 plus investment returns
• Total tax saved: Approximately $7,650

How to Apply

Step 1: Set Up Your Contributions

Before applying for FHSS, you need to make eligible contributions:

1. Contact your super fund: Inform them you want to make FHSS-eligible contributions
2. Set up salary sacrifice: Work with your employer’s payroll team
3. Track contributions: Keep records of all FHSS-eligible contributions

Step 2: Submit Your FHSS Application

Step 3: Required Information

When applying, you’ll need:

• Property details: Address, purchase price, settlement date
• Super fund information: Fund name, member number, account details
• Bank account: Where you want funds released
• Purchase contract: Copy of your property purchase contract

Withdrawal Process

Release Methods

You can request release of your FHSS amounts through two methods:

1. Maximum release amount: ATO calculates based on all eligible contributions plus deemed earnings
2. Specific amount: You specify the amount you want released (up to your maximum)

Timeline

Deemed Earnings Calculation

The ATO calculates deemed earnings on your FHSS contributions using the Shortfall Interest Charge (SIC) rate:

2024-25 SIC Rate: 10.26% per annum

Example calculation:

• Contribution: $15,000 on 1 July 2024
• Release date: 1 July 2025
• Deemed earnings: $15,000 * 10.26% = $1,539
• Total available: $16,539

Tax Implications

Tax on Release

When you withdraw FHSS amounts, you’ll pay tax on the released amounts minus your non-concessional contributions:

Tax calculation:

(Released amount - Non-concessional contributions) * (Your marginal rate - 30%)

Example Tax Scenarios

Scenario 1: Low Income Earner

• Income: $45,000 (marginal rate: 32.5%)
• Released: $30,000 (all concessional)
• Tax: $30,000 * (32.5% - 30%) = $750

Scenario 2: High Income Earner

• Income: $120,000 (marginal rate: 37%)
• Released: $50,000 (all concessional)
• Tax: $50,000 * (37% - 30%) = $3,500

Tax Offset

You receive a tax offset equal to 30% of the taxable component, ensuring you’re never worse off than if you had saved outside super.

Case Studies

Case Study 1: Young Professional Couple

Background:

• Alex (25, $65K income) and Sam (27, $70K income)
• Want to buy a $800,000 home in Brisbane
• Need $80,000 deposit (10% + costs)

FHSS Strategy:

• Both contribute $15,000 annually for 3 years
• Total contributions: $90,000
• Deemed earnings: ~$12,000
• Total FHSS amount: ~$102,000

Tax Benefits:

• Alex saves: $4,500 (15% vs 32.5% on $45,000)
• Sam saves: $5,100 (15% vs 37% on $45,000)
• Total tax saved: $9,600

Outcome: They use $80,000 for their deposit and save nearly $10,000 in tax.

Case Study 2: Single First Home Buyer

Background:

• Jordan (30, $55,000 income)
• Wants to buy a $500,000 apartment
• Needs $50,000 deposit

FHSS Strategy:

• Contributes $12,500 annually for 4 years
• Total contributions: $50,000
• Deemed earnings: ~$8,000
• Total FHSS amount: ~$58,000

Tax Benefits:

• Saves: $8,750 (15% vs 32.5% on $50,000)

Outcome: Jordan gets their full deposit plus extra funds, saving over $8,000 in tax.

Case Study 3: Career Change Scenario

Background:

• Riley (28, currently $45K, expecting promotion to $75K)
• Planning to buy in 2 years

FHSS Strategy:

• Year 1: Contribute $15,000 at lower tax rate
• Year 2: Contribute $15,000 at higher tax rate
• Different tax benefits each year

Outcome: Maximizes tax benefits by timing contributions with income changes.

Common Mistakes to Avoid

❌ Mistake 1: Contributing Too Early

Problem: Making contributions before you’re ready to buy Solution: Only start contributing when you’re 1-4 years from purchasing

❌ Mistake 2: Exceeding Annual Limits

Problem: Contributing more than $30,000 in a financial year Solution: Track contributions carefully and plan across multiple years

❌ Mistake 3: Not Understanding Property Requirements

Problem: Buying investment property or not meeting residence requirements Solution: Ensure you understand first home buyer requirements

❌ Mistake 4: Forgetting About Deemed Earnings

Problem: Not accounting for deemed earnings in tax planning Solution: Use ATO calculators to estimate total release amounts

❌ Mistake 5: Not Coordinating with Partner

Problem: Inefficient contribution timing between partners Solution: Plan contributions together to maximize benefits

❌ Mistake 6: Ignoring Super Fund Differences

Problem: Some funds have better investment options for FHSS Solution: Compare super funds before making large contributions

Frequently Asked Questions

Can I use FHSS if I’ve inherited property?

Generally no, but there are specific exceptions. If you inherited property but never had beneficial ownership, you may still be eligible. Consult the ATO for your specific situation.

What happens if I don’t buy a home?

You can recontribute the released amounts to super within specific timeframes, or keep the money and pay additional tax equal to 20% of the taxable component.

Can I use FHSS for renovations?

No, FHSS can only be used for purchasing your first home, not for renovations or improvements.

Does FHSS count toward contribution caps?

Yes, FHSS contributions count toward your annual concessional and non-concessional contribution caps, so plan accordingly.

Can I withdraw FHSS amounts gradually?

No, you must withdraw all eligible amounts in a single release. You cannot make partial withdrawals.

What if my super fund doesn’t support FHSS?

All APRA-regulated super funds must facilitate FHSS releases. If your fund is uncooperative, contact the ATO for assistance.

Can I combine FHSS with other first home buyer schemes?

Yes, FHSS can be combined with state-based first home owner grants and stamp duty concessions.

What happens if settlement falls through?

If your property purchase doesn’t proceed, you may be able to recontribute the amounts to super or apply for a new FHSS release for a different property within 12 months.

Official Resources

Australian Taxation Office (ATO)

• FHSS Information: ato.gov.au/individuals/super/in-detail/withdrawing-and-using-your-super/first-home-super-saver-scheme
• FHSS Calculator: Use ATO’s online calculator to estimate benefits
• Phone Support: 13 10 20 (individuals)

myGov Services

• Application Portal: my.gov.au
• Track Applications: Monitor your FHSS application status
• Documentation: Upload required documents securely

Professional Support

• Tax Agents: Find a registered tax agent via ato.gov.au
• Financial Advisers: ASIC MoneySmart has adviser search tools
• Super Funds: Contact your super fund’s member services

State Government Resources

Each state offers additional first home buyer support:

• NSW: firsthome.nsw.gov.au
• VIC: sro.vic.gov.au
• QLD: qld.gov.au/housing/buying-owning-home/first-home
• WA: wa.gov.au/government/document-collections/first-home-owner-grant

Conclusion

The First Home Super Saver Scheme is a powerful tool for first-time home buyers to reduce the time needed to save for a deposit while receiving significant tax benefits. With proper planning and understanding of the requirements, you can potentially save thousands of dollars in tax while building your home deposit faster.

Key takeaways:

• Plan contributions over multiple years to maximize benefits
• Understand tax implications and use ATO calculators
• Ensure you meet all eligibility requirements before contributing
• Coordinate with your partner if buying together
• Seek professional advice for complex situations

Ready to start your FHSS journey? Begin by calculating your potential benefits using the ATO’s online calculator and speaking with your super fund about setting up eligible contributions.

This guide provides general information only and should not be considered personal financial advice. Always consult with qualified professionals for advice specific to your situation.

Last updated: January 2025 | Next review: July 2025