Saving Tax While Saving for a Home

Financial Planning Read time 4mins
03 Jun 2024
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For many Australians, owning a home is a significant milestone. However, rising property prices and cost of living pressures have made it increasingly challenging for first-time buyers to save for a deposit.

To address this, the Australian Government introduced the First Home Super Saver (FHSS) Scheme. This initiative allows first-time homebuyers to use their own superannuation contributions to help save a deposit, leveraging the tax benefits of superannuation to accelerate savings.

How the FHSS scheme works

The FHSS scheme enables individuals to make voluntary contributions to their superannuation fund, which can later be withdrawn to purchase a first home. These contributions can be either concessional (before-tax) or non-concessional (after-tax), providing flexibility depending on the saver’s financial situation.

  • Concessional Contributions: Eligible concessional contributions include salary sacrifice arrangements and contributions made to superannuation where a tax deduction has or will be claimed. It is important to note that employer super guarantee payments are not eligible for the FHSS.
  • Non-Concessional Contributions: These are personal after-tax contributions (i.e., a contribution made from your bank account) where you have not claimed a tax deduction.

The maximum voluntary contribution that can be made under the FHSS scheme is $15,000 per financial year and $50,000 in total. These contributions must be within regular contribution limits (discussed here).

Benefits of the FHSS scheme

The primary advantage of the FHSS scheme is its tax effectiveness. For an individual earning $120,000 and wanting to save $750 per month, the below example shows how the FHSS scheme differs from saving personally.

If this money is saved in a bank account, the individuals monthly income of $10,000 is reduced to $7,339 after tax is paid. Once $750 is allocated to a savings account, the individual is left with $6,589 as a disposable income. After three years, these savings will add up to $27,000.

In contrast, if this individual commences a salary sacrifice arrangement of $1,149 per month to their super fund, this will have the same impact of reducing their disposable income (post-tax and after savings) to the same amount of $6,589. After three years, the savings in super will add to $33,577 providing an additional $6,577 in savings that can be used for a deposit.

FHSS Bank account
Gross income (monthly) $10,000 $10,000
Salary sacrifice $1,149 $0
Income (after tax) $6,589 $7,339
Savings in personal bank account $0 $750
Disposable income (after tax/savings) $6,589 $6,589
Superannuation Contribution Tax $172 $0
Net savings (monthly) $977 $750
Savings (after 3 years, post-tax) $33,577 $27,000

Withdrawing your FHSS savings

When you’re ready to purchase your first home, you can request a determination from the Australian Taxation Office (ATO) who will calculate your maximum withdrawal amount and release your FHSS savings when you’re ready. You do not need to have found a home yet, but you will need to buy within 12 months of the withdrawal.

The maximum amount that can be released is the sum of eligible contributions (100 per cent of non-concessional contributions and 85 per cent of concessional contributions) and associated earnings calculated using a deemed rate of return. Concessional contributions and associated earnings will be taxed at your marginal tax rate, but the FHSS provides a 30% tax offset to ensure the tax effectiveness of the strategy remains.


To be eligible for the FHSS scheme, you must:

  1. Be 18 years or older.
  2. Never have owned property in Australia: This includes residential, investment, or commercial property.
  3. Intend to live in the premises: The property must be occupied by you for at least six months within the first year of ownership.
  4. Not previously utilised the FHSS.


The ATO has particular administration requirements and knowing your timeframes is critical in getting the most out of this scheme:

  • You are not permitted to sign a contract before requesting an FHSS determination from the ATO.
  • Once a withdrawal request is made, a contract to buy or construct a home must be signed within 12 months.
  • The ATO must be notified within 28 days of signing a contract.


The FHSS scheme presents a valuable opportunity for first-time homebuyers in Australia to leverage the tax advantages of superannuation to boost their first home deposit. To access these benefits, there are a range of considerations from managing the type of contribution made, navigating the withdrawal and liaising with the ATO. An Evans and Partners financial adviser can help assess your financial situation and support you in your homebuying journey.


Ishara Rupasinghe
Executive Director, Senior Strategy Adviser


This document was prepared by Evans and Partners Pty Ltd (ABN 85 125 338 785, AFSL 318075) (“Evans and Partners”). Evans and Partners is a wholly owned subsidiary of E&P Financial Group Limited (ABN 54 609 913 457) (E&P Financial Group) and related bodies corporate.

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