FHSS Scheme: An Overview
Welcome to our blog post on the FHSS Scheme – an overview! This post will provide you with all the information you need to know on the First Home Super Saver Scheme (FHSSS) and how it can help you when it comes to buying your first home. The FHSSS is a great way for first home buyers to save money for their deposit and other costs associated with buying a home. We will look at how the scheme works, the eligibility criteria and the benefits of utilising the scheme. We'll also discuss any potential risks you should be aware of before making the decision to use the FHSSS. Finally, we'll provide you with some tips to help you make the most of the scheme. So, if you're considering the FHSSS for your next purchase, read on!
What is the FHSS Scheme?
The First Home Super Saver (FHSS) Scheme is a government initiative designed to help Australians save for their first home. It was introduced in 2017 by the Australian Government as part of its commitment to increasing housing affordability.
The scheme allows individuals to save money for their first home inside their superannuation fund. This money is then released as a lump sum payment to help with the purchase of a home. The maximum amount that can be contributed to the scheme per financial year is $15,000, and the total amount that can be released is $30,000.
The main benefit of saving for a first home through the FHSS Scheme is that it allows Australians to take advantage of the tax concessions available to superannuation funds. This means that their savings are taxed at a lower rate than if they were saved outside the superannuation system.
When considering whether the FHSS Scheme is a good option for saving for a first home, potential home buyers should consider the impact of the scheme on their overall financial position. As the money saved through the scheme is released as a lump sum, potential buyers should consider how this money will affect their overall budget, as well as how it will affect their ability to pay off a mortgage. They should also consider the impact of the scheme on their superannuation balance, as contributions to the scheme are taken from the individual’s superannuation balance.
In addition, potential buyers should consider whether the FHSS Scheme is the best option for their specific situation. They should also consider the impact of the scheme on their eligibility for Commonwealth assistance, such as the First Home Loan Deposit Scheme.
Overall, the FHSS Scheme is an excellent way for Australians to save for their first home. However, potential buyers should consider the impact of the scheme on their overall financial position, and they should ensure that it is the best option for their specific circumstances.
Who is Eligible for the FHSS Scheme?
The FHSS Scheme is designed to help Australians save for their first home. It's an effective way to build a larger deposit and reduce the amount of money required upfront.
To be eligible for the FHSS Scheme, you must meet certain criteria set by the Australian Taxation Office (ATO). Generally speaking, you must be an Australian resident, aged 18 or over, and have not previously owned real estate in Australia. You must also have an income of less than $125,000 for individuals or $250,000 for couples.
You are also required to meet the Superannuation contribution rules set by the ATO. This means that, to use the FHSS Scheme, you must make a voluntary concessional or non-concessional contribution to your super fund. Your contribution must be made within the financial year and you must not exceed the concessional or non-concessional contribution caps.
The FHSS Scheme also has specific rules regarding the use of the funds. If you withdraw from your super fund to use the FHSS Scheme, the money must be used to purchase or build a residential property within 12 months of the withdrawal. If the funds are not used within this timeframe, they must be returned to your super fund with interest.
When considering the FHSS Scheme, it's important to be mindful of the eligibility criteria and the rules surrounding the use of the funds. If you meet the criteria and understand the rules, the FHSS Scheme can be a great way to save for your first home.
How Does the FHSS Scheme Work?
The FHSS Scheme (First Home Super Saver Scheme) was introduced in 2017 by the Australian Government to help Australians save for their first home deposit. The Scheme allows Australians to make voluntary contributions into their superannuation fund, up to a maximum of $30,000, to help them save for a deposit.
In order to contribute to the FHSS Scheme, individuals must make voluntary contributions into their super fund which are then taxed at a concessional rate of 15%. This means that individuals are able to save money for their deposit and receive a tax benefit at the same time.
Once the funds are contributed to the super fund, the individual then needs to apply to the Australian Tax Office (ATO) for a FHSS determination. This will provide the individual with an amount which can be released from the super fund to put towards their deposit. The ATO will also assess the individual’s eligibility for the scheme and confirm the amount that can be released.
The amount that can be released is limited to the total amount contributed to the super fund, plus any associated earnings. This means that the individual can access the amount they have contributed and any earnings on that amount. The earnings are taxed at the individual’s marginal tax rate when they are released from the super fund.
When thinking about the FHSS Scheme, individuals should consider their own financial situation and whether they are eligible for the scheme. They should also consider how much they can contribute to their super fund, and how much they can access when they apply for a FHSS determination. Individuals should also consider how the tax rate on the earnings from their contributed funds will impact their overall savings.
Overall, the FHSS Scheme is a great way for Australians to save for their first home deposit and receive a tax benefit at the same time. It is important for individuals to think carefully about their own financial situation and whether the scheme is right for them.
Benefits of the FHSS Scheme for Mortgage Brokers and Clients
Mortgage brokers and clients alike can benefit from the FHSS Scheme, and understanding how can help them make the best decisions for their individual circumstances.
The FHSS Scheme allows individuals to access their voluntary superannuation contributions for the purpose of buying their first home. This can be a great way for clients to purchase a home sooner than they would otherwise be able to. It also helps them avoid paying any additional taxes on the money they’ve already saved in their superannuation account.
For mortgage brokers, the FHSS Scheme can provide an additional stream of income. It can be a valuable tool for helping clients access the funds they need to purchase a home, and it can also be a great opportunity to provide additional services to clients.
When advising clients on the FHSS Scheme, it is important to understand the eligibility requirements and how much can be withdrawn. It is also important to consider the additional taxes that may be payable upon withdrawal, as well as any other costs associated with the scheme.
When advising clients, it is also important to consider the long-term implications of the FHSS Scheme. For example, it can affect the amount of superannuation the client has available for retirement, and could potentially affect their retirement savings. It is also important to consider whether the FHSS Scheme is the best option for the client in light of their individual circumstances.
Ultimately, the FHSS Scheme can be a great tool for both mortgage brokers and clients. But it is important to understand the eligibility requirements, potential costs, and long-term implications before making any decisions.
Got questions about the FHSS? We want to help
We hope this article has provided you with a comprehensive overview of the FHSS scheme. At Ello Lending, we are more than happy to answer any questions you may have about the FHSS scheme and assist you with taking advantage of the potential benefits of this program. We would love to discuss your individual needs and how the FHSS scheme might benefit you. So, if you have any questions or want to find out more about the FHSS scheme, please don't hesitate to contact us.
