Want an extra $10,000 for your house deposit? This scheme could help

As Australian property prices continue to grow, first home buyers remain on the hunt for ways to get a leg-up, especially if the bank of mum and dad isn’t an option.

It’s a wonder then that the First Home Super Saver scheme isn’t more popular, having issued just 13,200 payments last financial year, despite it being able to increase the size of your housing deposit by over $10,000. So if you’re thinking of using it, here’s what you should know.

It’s a wonder the First Home Super Saver scheme isn’t more popular, given the potential it has in helping first home buyers save a deposit.Credit: Getty

Firstly, it’s important to note if you don’t use your superannuation savings to buy a house you can still withdraw the funds, you just have to pay a top-up tax that is designed to remove the initial tax advantages, not punish. You can find all the fine print here.

You are entitled to contribute up to $50,000 to the scheme before tax. If the contributions are tax-deductible/concessional contributions, 15 per cent tax will have to be paid so the maximum that your contributions can contribute towards a deposit is $42,500, but you also get to withdraw the earnings.

For a couple, that is probably a total of $90,000. To avoid mortgage insurance you need a 20 per cent deposit so $90,000 will only give you $450,000 to spend, which means the scheme is unlikely to be suitable as your sole form of saving towards a house deposit.

You will still need to save outside of superannuation or find an arrangement where a lower deposit is acceptable such as the government’s home guarantee scheme.

The maximum you can contribute each year is $15,000 after the contributions tax of 15 per cent, assuming your income is not over $250,000. If you take $17,647 in before tax income and contribute it to superannuation, the superannuation fund will pay $2,647 tax on it leaving $15,000 invested.

Be careful here, as you need to remain under the $30,000 concessional contributions cap for the year, which includes your employer’s contributions under the guarantee. If you have less than $500,000 in superannuation, and you have not used up all of your superannuation caps in the previous five years you can utilise these unused caps to exceed the $30,000 limit.

Let’s compare this strategy with savings outside of superannuation, taking that same $17,647. Assuming you are in the 32 per cent tax bracket – currently between $45,000 and $135,000 – this will give you $12,000 to invest after paying tax.

The earnings on the superannuation contributions are deemed to be the ATO general interest charge, currently around 11 per cent which is 9 per cent after tax. Compare that with maybe 6 per cent on earnings outside of superannuation which is 4 per cent after tax.

Note when the superannuation is withdrawn you must pay a further tax on the difference between your tax rate and 30 per cent. If you are earning under $135,000 this will only be 2 per cent. Nevertheless, the higher your tax bracket, the greater the tax benefits of saving inside superannuation.

So how do you go about this? If you are reading this before June 30 and have some savings, you might want to contribute $17,647 to utilise your 2025 cap. You claim this as a tax deduction in your 2025 tax return by notifying the superannuation fund of your intention.

Then, for the 2026 financial year, organise for your employer to take $339 a week out of your before tax salary and contribute it to superannuation for you as a salary sacrifice, set and forget.

If the money is not in your pay packet you can’t spend it, and if it was in your pay packet, it would only be $231 after tax, even less if you earn more than $135,000.

Make sure you check your eligibility before you start, and make sure you withdraw before you buy and notify the ATO within 90 days of the contract date when you do.

Julia Hartman founded BAN TACS Accountants more than 30 years ago and is still passionate about all things tax.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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