Can You Use Your Super for a House Deposit?

Australia’s superannuation system is designed for retirement savings, with funds generally inaccessible until preservation age. However, the Australian government allows early access for certain significant life events, including using a portion of superannuation savings for a first home deposit.

Understanding the First Home Super Saver Scheme

The First Home Super Saver (FHSS) Scheme is a government program designed to assist first-time homebuyers in accumulating a home deposit more quickly. It leverages the tax-advantaged environment of superannuation to boost savings. Eligible individuals make voluntary contributions to their super fund, which can later be withdrawn, along with associated earnings, to contribute towards a first home purchase.

To be eligible for the FHSS Scheme, a person must be at least 18 years old when they request a FHSS determination from the Australian Taxation Office (ATO). The applicant must never have previously owned any real property in Australia, including residential, investment, or commercial properties.

The scheme is assessed on an individual basis, meaning that couples, siblings, or friends purchasing a property together can each access their own eligible FHSS contributions. The property intended for purchase must be a residential premises located in Australia, and the individual must intend to occupy the purchased property as their home for at least six months within the first 12 months of ownership.

Making Eligible Super Contributions

Participating in the First Home Super Saver Scheme requires making specific types of voluntary contributions to a superannuation fund. These contributions are distinct from the compulsory Superannuation Guarantee (SG) contributions made by an employer. The two main types of eligible contributions are voluntary concessional contributions and non-concessional contributions.

Voluntary concessional contributions include salary sacrifice amounts and personal voluntary contributions for which an individual intends to claim a tax deduction. These contributions are taxed at a concessional rate of 15% within the super fund.

Non-concessional contributions are personal after-tax contributions for which no tax deduction is claimed. For the FHSS Scheme, eligible contributions are capped at $15,000 in any single financial year, with a total maximum limit of $50,000 across all years.

These contributions must fall within the broader superannuation contribution caps, such as the annual concessional contributions cap and non-concessional contributions cap. Individuals claiming a tax deduction for personal contributions must submit a “Notice of intent to claim a tax deduction” to their super fund before applying for a FHSS determination. Contributions are counted for the FHSS scheme on the date they are deposited into the super fund account, not necessarily the payslip date.

Requesting Your FHSSS Release

Once eligible super contributions have been made, the next step involves requesting a release of funds through the Australian Taxation Office (ATO). This process involves two distinct stages. The first stage is to request a FHSS determination, which confirms the maximum amount an individual is eligible to withdraw.

The determination request is made through ATO online services. Individuals will need to provide personal identification and details of their super fund. The ATO will then calculate the maximum releasable amount, which includes 100% of eligible non-concessional contributions, 85% of eligible concessional contributions, and a deemed amount of associated earnings on both types of contributions.

After receiving a FHSS determination, the second stage involves submitting a request for a FHSS release through ATO online services. The individual specifies the amount they wish to release, up to the determined maximum.

Upon receiving the release request, the ATO instructs the super fund to transfer the eligible funds. The ATO then withholds an estimate of the tax owed on the assessable portion of the released amount and pays the remaining funds directly to the individual’s nominated bank account. This process typically takes between 15 to 20 business days.

Using Your Released Funds and Ongoing Obligations

After the First Home Super Saver Scheme funds are released, strict conditions govern their use. The released money must be used specifically to purchase or construct a first home in Australia. This includes buying an existing residential property or building a new one on vacant land, provided it will be the individual’s primary residence.

An individual must sign a contract to purchase or commence construction of their first home within 12 months from the date they requested the FHSS release. If a contract is not signed within this initial period, the ATO automatically grants an extension for an additional 12 months, providing a total of up to 24 months.

Once a contract is signed, the individual must notify the ATO of the purchase. This notification period can vary depending on when the FHSS determination was obtained; for determinations dated before September 15, 2024, notification is required within 28 days of signing the contract. For determinations made from September 15, 2024, the notification period is 90 days. This notification is typically completed through ATO online services.

If the released funds are not used to purchase a home within the stipulated timeframe, or if the individual decides not to proceed with a first home purchase, specific consequences apply. The individual has two options: re-contribute the assessable FHSS amount back into their superannuation fund as a non-concessional contribution. Alternatively, if the funds are not re-contributed, the individual will be subject to a 20% tax penalty on the assessable released amount.