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If you don’t intend to take out a loan or go through the hassle of calculated savings every month, you may only be able to use your super when you’re 65 or a retiree. Starting an SMSF is quite a big responsibility and you will need to comply with super and tax laws. Getting it wrong can have serious financial impacts, so it’s always best to consult with a licensed financial advisor to make sure this is the right decision for you.
Here at Hunter Galloway we’ve helped hundreds of first home buyers take that first step into owning property. Our service is completely free as we are paid a commission by the banks. Answer the questions below to help us calculate your probability of securing a loan. We’re looking forward to meeting you and help you find the right loan for your needs.
FHSSS $15,000 Annual Contribution for 2 Years ($30,000 Total)
Once you’re ready to release the funds, you need to apply for an FHSS determination. Once you’re ready to release the funds (the best part!), you will need to apply for a FHSSS determination and release form. Apply for the funds before or after signing the purchase contract as you have 12 months to use the funds. You can’t put the money back if you don’t go ahead with a purchase. Once you’re ready to make the purchase, apply to ATO for the funds to be released using the MyGov app.
Before-tax super contributions are usually taxed at 15%. If you earn between $45,001 and $120,000, you’ll typically pay 32.5% income tax. The lower tax rate could help to grow your super savings faster than saving the same amount of your after-tax income in a bank account. Well, you can choose to make before-tax contributions to your super account through a salary sacrifice program with your employer. Then you can withdraw the funds to use as a deposit to buy or build your first home. A house deposit is only a portion of the total house cost.
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Moreover, if the fund is owned by more than one member, they can invest and buy property together. The parties involved can be relatives, business partners, companies or trusts controlled by both members. Additionally, if a couple is planning on buying a home together, they can access up to $60,000 per year. Since eligibility is calculated individually, a couple can actually access up to $30,000 each from their super to buy the same house.
The more you save, the easier it will be financially to pay your mortgage and still afford to live. Returns are limited to the Shortfall Interest Charge rate of 4.96% p.a. You will need to apply for and receive, an FHSSS determination before applying for the funds to be released. There is limited flexibility in terms of use of the savings amount.
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You have 12 months from the date you make a valid release request to notify us if you have signed a contract to purchase or construct your home, or recontributed the required amount to your super fund . The Australian property market has been very buoyant in recent years, which has made it attractive for investment purposes, but it’s also made it hard for first time home buyers to get into the market. That’s where the First Home Super Saver scheme can step in – to help first home buyers save for a deposit using their super account. Find out how you can use your super to save for your first home.
Go to the Super drop-down menu and select Manage, then select First home saver. You must provide evidence with your application that demonstrates the link between the loss of your property and your hardship event. If you have an outstanding debt with the ATO or another Commonwealth agency, your FHSS release amount may be offset against this debt. Payment of your FHSS amount could be delayed or reduced or both if you have an outstanding Commonwealth debt. The home you purchase or construct must be located in Australia. You haven’t previously owned a property in Australia#.
An important point to be aware of is that if an individual decides not to use the funds for property purchase, you cannot use the funds until retirement. The key thing to consider is if you think the benefit from buying a house using your super outweighs the potential long-term cost of withdrawing money from your superannuation. The purpose of diversification is to spread the risk, but there is no hard and fast rule saying that all of the fund’s money cannot be invested in a single property. If you’re not a first home buyer and not in a Self Managed Super Fund, the only other circumstance in which you can use your super to buy a house is when you have full access to your superannuation.
Boosting the size of your deposit may mean you avoid paying LMI, and you may also be able to secure a better interest rate on your loan. Pay off all or most of your home in your working lifetime. If you wait longer to buy a home, you may be left with a large home loan balance to pay off in your retirement. If you are in a Self Managed Super Fund , you can use money from the fund to buy an investment property. That’s when you’ll need to meet the eligibility requirements like having never owned property in Australia. The good news is that this means the scheme can be used by each member of a couple for the purchase of a property.
Alternatively, you can buy a house inside your super, then transfer the house out of super into your own name and live in it for retirement. You’ll likely pay less tax and receive better returns on your super contributions – which should help to grow your house deposit savings faster. The amount of tax withheld is calculated on your assessable FHSS released amounts and will help you meet your end of year tax liabilities.
Where you buy a property, you must occupy this as soon as practicable. Or for at least six months within the first 12 months you own it, after it is practical to move in – for example, where the property is being built or a renovation is being made to the property. What you therefore need to be aware of, which can be a positive for you, is that eligibility to use your super towards a home purchase is assessed on an individual basis. The information in this article is for general interest and is not intended as advice. For advice and planning, consult an experienced financial planner.
To help you get a better idea of this financial pathway, we’re going to be exploring how, when and where a super can be used, what it’ll cost you as well as the pros and cons. Make sure you understand the FHSS rules in full before using it to save towards your first home. Buying a house with your superannuation is possible, but there are some things you need to understand before doing so. The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation.
† Before adding to your super, consider your financial circumstances, contribution caps that may apply, and tax issues. Salary sacrifice may affect some Government benefits and employee benefits. Consider getting financial advice before deciding if a salary sacrifice arrangement is right for you. Sure, this part might seem the most intimidating, but with a thoughtful strategy in place, it’s easier than you think. In many situations, you’ll need to save 20% of the value of the property you’re after.
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