First-home buyers can now use superannuation to save for deposit

ASPIRING first-home savers struggling with soaring property prices have been given a lifeline. They can now dip into their superannuation fund to save for a house deposit.

ASPIRING first-home savers struggling with soaring property prices have been given a lifeline to use their superannuation fund to save for a house deposit.

The First Home Super Saver Scheme passed through Parliament this month now allows entry-level buyers to stash cash using their super accounts while reaping significant tax benefits.

Announced in the Federal Budget in May, the Turnbull Government said the scheme would help make owning a home become a reality for those squeezed out of the market, particularly in Sydney and Melbourne.

First-home savers can now use their superannuation accounts to save for a deposit.

Through the scheme, individuals can now contribute up to $15,000 each financial year above their compulsory contributions to a maximum of $30,000.

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Couples can contribute together up to $60,000 in total.

These are the maximum extra contributions that can be made under the scheme.

And from July 1 next year super members can make withdrawals of these extra savings tucked away in their super accounts to purchase property.

Treasurer Scott Morrison said the scheme will help first-time savers get a deposit together more quickly.

Treasurer Scott Morrison estimated most first-home buyers would be able to accelerate their savings by at least 30 per cent using the scheme.

Homeloanexperts.com.au’s managing director Otto Dargan said the scheme was a win for savvy first-time buyers but many people remained confused about how it works.

“It’s good to see that the government recognises the challenge facing first home buyers and is prepared to take action to help them,’’ he said.

“We’ve seen some first home buyers who think they can withdraw their current superannuation or who made large contributions before the 1st of July.”

Home Loan Experts managing director Otto Dargan says the government is recognising the challenge facing home buyers.

Dixon Advisory’s head of advice Nerida Cole said for an average wage earner on about $80,000 if they can maximise the $30,000 limit for singles over a two-year period they will end up will about $5000 more in their pocket to contribute a deposit under the tax concessions.

ASFA chief executive Dr Martin Fahy said the new scheme is still relatively unknown.

The peak superannuation body, the Association of Superannuation Fund of Australia’s chief executive officer Dr Martin Fahy, said it remains unclear how many people will take up the scheme.

“It is very hard to predict numbers at this stage,’’ he said.

“However the number making use of the scheme could be reasonably limited initially as it will take some time for the scheme to become well known.”

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