Yahoo Finance Huge change to $50,000 superannuation scheme for Aussie first-home buyers in days
Changes to the First Home Super Saver Scheme come into effect on September 15 and experts say it will make it more flexible for homebuyers.
Changes to the First Home Super Saver Scheme are coming into effect this week. With home ownership becoming more challenging for many Aussies, it’s hoped the changes will make it a bit easier for Aussies to get a foot on the property ladder.
The First Home Super Saver Scheme allows first-home buyers to make voluntary contributions to their super to help them save for their first home. They can then withdraw up to $50,000 worth of those contributions to put towards a home deposit.
Alexandra Cooper is one Aussie who is using the scheme to save up for her first home with her partner.
The 28-year-old marketing professional told Yahoo Finance the pair had been saving for the past year and had a goal of saving $50,000 each for a deposit.
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“It’s been tough especially at the moment with the cost of living and trying to balance our rent, groceries and other expenses, especially because we live in Sydney as well,” Cooper said.
She said it was a “slow process to build up the savings” and said they were considering all property options, including buying a smaller apartment in Sydney or moving to Newcastle.
She heard about the First Home Super Scheme from a friend and started making salary sacrifice contributions to her superannuation about six months ago.
“I’m putting $300 monthly at the moment. It’s been good because it is a set-and-forget thing and I can’t touch it compared to my savings account where if you are feeling like it, you can transfer out,” she said.
“Having it in my super means it is out of mind and I know that it’s going towards my goal and I can’t access it until the time comes.”
Cooper said she has also been budgeting strictly and cutting back on discretionary purchases like dining out, beauty and takeaway coffee to help build her savings. She also has a separate savings account and invests using micro-investment platform Raiz.
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What is changing with the First Home Super Saver Scheme?
UniSuper’s Brooke Logan told Yahoo Finance the upcoming changes, which come into effect on September 15, would make the scheme more flexible for first-home buyers.
“They are making the scheme a bit more flexible and hopefully [helping] people to feel more confident using the scheme,” she said.
“One of the changes is it allows them to change their mind about releasing the funds. At the moment, you can only ever release funds once under the First Home Super Saver Scheme and if you release the funds and change your mind or make an error, that’s bad luck.
“They are saying as long as we haven’t started getting those funds from your super fund, you can change your mind. If circumstances change and you no longer want to withdraw the funds, we will put a stop on it and you can do it down the track.”
The timing requirements are also changing.
Previously, you could request to release your funds up to 14 days after you entered into a contract to purchase or build a home. Now, that will be extended to 90 days.
Individuals who previously tried to withdraw funds through the scheme but weren't successful, will also have the ability to try again.
The Australian Taxation Office (ATO) has outlined all the nitty gritty details here.
First Home Super Saver Scheme: Pros and Cons
Logan said the First Home Super Saver Scheme could have tax benefits if you made before-tax contributions, such as salary sacrificing.
“That can be beneficial because those contributions are taxed at 15 per cent in super rather than your marginal tax rate which could be up to 45 per cent,” she told Yahoo Finance.
“There’s other benefits as well, such as for some people might find if they save in their bank account they can access the funds whereas you put in super it kind of forces you to save more.”
In terms of risks, Logan said it was important to be aware of the conditions for releasing your funds.
“The main one is that they do need to enter a contract to build or purchase a home generally within 12 months but the ATO can extend that sometimes,” she said.
“So they do need to do that within 12 months otherwise if they don’t find a home, they can either put the funds back into super or pay a penalty tax of up to 20 per cent.”
Logan noted the scheme could be used in conjunction with other first-home owner grants and concessions, such as the First Home Guarantee Scheme.
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