First Home Super Saver 2025 | Withdraw up to $50k Tax-Smart

The First Home Super Saver Scheme allows eligible buyers to save up to $50,000 per person inside superannuation, with tax advantages and flexible withdrawal for home deposits. Higher concessional contribution caps from 2025 make this more attractive.

What is FHSSS?

The First Home Super Saver Scheme (FHSSS) allows eligible first-home buyers to save for a deposit inside their superannuation fund, where contributions are taxed at just 15% instead of their marginal tax rate. This can result in significant tax savings, particularly for middle and high-income earners.

Under the scheme, you can make voluntary contributions to your super and later withdraw them (plus deemed earnings) to help purchase your first home. The key advantage is the tax treatment: instead of paying your marginal tax rate on savings, you pay the concessional 15% super tax rate on contributions.

The contribution limits are designed to provide meaningful deposit assistance while maintaining the scheme's focus on first-home buyers:

• Annual limit: $15,000 per financial year in voluntary contributions
• Total limit: $50,000 maximum over your lifetime
• Contribution types: Only voluntary contributions count (salary sacrifice or after-tax contributions)
• Earnings calculation: The ATO calculates deemed earnings using the shortfall interest rate

Withdrawal & tax rules

When you withdraw FHSSS funds, the tax treatment is designed to leave you in a similar position to if you had saved the money outside super, but with the benefit of the tax concession during the contribution phase.

How FHSSS withdrawals are taxed

FHSSS withdrawals are taxed at your marginal tax rate minus a 30% tax offset. This formula ensures you're not disadvantaged compared to regular savings while preserving the benefit of the initial tax concession.

Purchase timeline requirements

The FHSSS includes strict timing requirements designed to ensure the scheme supports genuine first-home purchases:

• Contract deadline: Sign a contract to purchase your first home within 12 months of your first FHSSS release
• Extension available: One 12-month extension can be granted in exceptional circumstances
• Failure to purchase: If you don't buy within the deadline, released amounts must be returned to super with additional tax consequences
• Re-contribution: Returned funds become non-concessional contributions, potentially affecting your contribution caps

Strategy tips

Maximizing the FHSSS requires strategic planning, particularly around timing contributions and coordinating with other first-home buyer supports.

Salary sacrifice vs after-tax contributions

Both salary sacrifice and after-tax contributions can count toward FHSSS, but they have different tax implications:

• Salary sacrifice: Reduces your taxable income immediately and is taxed at 15% in super. This is usually the most tax-effective option.
• After-tax contributions: Made from your take-home pay, but you can claim a tax deduction if your fund accepts personal deductible contributions.
• Spouse contributions: If your partner earns less than $40,000, you might get a tax offset for contributing to their super for FHSSS purposes.

Managing contribution caps

FHSSS contributions count toward your annual concessional contribution cap (currently $27,500). This means:

• Include employer super guarantee payments in your cap calculations
• Monitor total concessional contributions to avoid excess contributions tax
• Consider timing contributions across financial years to maximize benefits
• Use carry-forward provisions if your super balance is below $500,000

For couples planning together

Both partners in a relationship can use FHSSS independently, potentially doubling the available deposit boost:

• Individual limits: Each partner can contribute and withdraw up to $50,000
• Combined benefit: Couples could access up to $100,000 plus deemed earnings
• Separate applications: Each partner must apply for their own FHSSS release
• Joint purchase: Both can use their FHSSS funds toward the same property purchase

Impact on retirement savings

While FHSSS reduces your super balance in the short term, the long-term impact may be minimal if you use the tax savings effectively:

• Tax savings reinvestment: The annual tax savings from salary sacrifice can be redirected to additional super contributions
• Property investment: Your home becomes part of your overall wealth-building strategy
• Future contributions: Continue regular super contributions after purchasing to rebuild your balance
• Compound growth: Earlier homeownership may free up rental payments for additional super contributions

The First Home Super Saver Scheme provides a tax-effective way to boost your deposit while taking advantage of superannuation's concessional tax treatment. For higher-income earners especially, the tax savings can be substantial. However, success requires careful planning around contribution timing, purchase deadlines, and coordination with other supports. Consider seeking financial advice to optimize your FHSSS strategy within your broader financial goals.

First-home buyers should also explore the Help to Buy shared equity scheme and First Home Buyer Grant to maximize available support when entering the property market.