22 June 2018

How to use your super to buy your first home

| Canberra Community Bank
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The government’s new First Home Super Saver Scheme can help you buy your first home.

If saving for your first home is on your list of New Year’s resolutions for 2018, you might want to investigate the federal government’s new First Home Super Saver Scheme.

Announced in the 2017-2018 budget, and introduced into Parliament in early September, the scheme essentially allows individuals to make additional contributions into their super accounts that can later be withdrawn to buy their first home.

More than just a way to “put it away where it can’t be touched”, the benefits of the scheme lie in the tax breaks that potentially allow you to save for a deposit much faster than you could with a standard savings account.

How it works

From 1 July 2017, first home buyers can make voluntary contributions up to $15,000 per financial year, culminating in a maximum withdrawal of $30,000 for a home deposit.

You can start making contributions now, with withdrawals allowable after July 2018.

Contributions can be:

  • undeducted post-tax personal contributions;
  • deducted pre-tax personal contributions;
  • salary sacrifice contributions.

To find out which is best for you, please see your accountant.

The tax breaks

The above super contributions are taxed at just 15 per cent, rather than paying (for example) 30 per cent tax and then putting the money into a savings account. You may also be able to decrease your taxable income (and save on end of financial year tax) at the same time.

Another benefit is the potential higher rate of earnings that can be achieved with your contributions (profits on your investment). And when it comes time to withdraw, the withdrawal is taxed at a marginal tax rate less a 30 per cent offset.

It’s estimated that most first home buyers could boost their savings by at least 30% compared to traditional saving in a standard deposit account. If a couple were buying their first house together, both could make use of the scheme and essentially save upwards of a $50,000 deposit over a few years.

For more information about the scheme, read the fact sheet. To find out how much you could save (in terms of tax and your deposit), check out the First Home Super Saver Scheme Estimator tool.

Securing your first home loan

If you’re a first home buyer and are not really sure where to start, pop into one of your local Community Bank® branches.

We can help you make sense of the First Home Owners grant (including how to apply), determine how much you will need to save for a deposit, and shed light on any part of the purchasing process you might be struggling with.

As part of our ‘Own Your Happy Place’ campaign, first home buyers also pay no upfront fees when they take out a home loan, and get access to very competitive interest rates.

For more information, visit your local Canberra Community Bank branch in:

Curtin: 1/20 Curtin Place, Curtin. Ph: 6260 5140

Jerrabomberra: 2a/2 Limestone Dr, Jerrabomberra. Ph: 6299 8357

Wanniassa: Wanniassa Shopping Centre, Sangster Place. Ph: 6231 9024

Calwell: Calwell Shopping Centre, Webber Crescent. Ph: 6291 3385

Please remember to consult your accountant or financial adviser before making any significant financial decisions.

This is a sponsored article, though all opinions are the author’s own. For more information on paid content, see our sponsored content policy.

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Capital Retro3:43 pm 03 Jan 18

The article recommends applicants to “see their accountant”.

The last time I sought advice from and accountant on a superannuation matter the fee was $300.00 + GST per hour.

To earn enough interest to recoup $330 the fund would have to have a net balance of about $15,000, at least.

The problem with this is it takes too much time and if your circumstances change and you don’t end up buying a house, you’ve just put all your money into a place where you can’t get it out again. While I don’t support using super funds specifically to buy property, surely some kind of securing system by which you use your super funds to secure part of your Homeloan, with payments designed to pay down the secured portion quickly would be much more useful/immediate for 1st home buyers. The current scheme just keeps them out of a market that gets more and more expensive everyday for a longer period.

I appreciate that this has implications of availability of funds for the super industry but surely the ROI on the properties secured against these funds (if only for the person buying their property) is worthwhile over the long term – getting in earlier to pay off a mortgage sooner is generally going to have positive benefits for the purchaser. Plus, you still get to keep your principal super amount. You’d essentially be making youroney work 2x over a life time.

Zac Robinson2:10 pm 02 Jan 18

Agree and good suggestion. The conditions attached to you savings means that it is not an ideal scheme. I would suggest that first home buyers look to a limited guarantee to get into their home quicker and then start paying it down. A limited guarantee means your guarantor only guarantees a portion of their property for only a limited amount of time to help with say a deposit or avoiding LMI. Not widely heard of but available at most financial institutions: https://goo.gl/DDWAj3

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