First home saver accounts offer a tax-effective way of saving for your first home through a combination of government contributions and low taxes. You need to open a special account that is like a term deposit.

Benefits

  • The government will make a contribution equal to 17% of your personal contributions for the financial year, up to a maximum amount each year.

  • Earnings on your first home saver account are taxed at 15%

  • You don't have to report any income you earn from your account on your tax return.

  • The first home saver accounts are not taken into account in the income and assets tests that apply to various government benefits, including family tax benefit.


Eligibility

  1. You must be aged 18 to 65 and not have owned a house in Australia

  2. You must be an Australian resident for income tax purposes for at least part of the financial year.

  3. Contributions are made before you buy or build your home

  4. You can still apply for a first home owner grant if you decide to open a first home saver account. (While it lasts)

Opening an account

Banks, building societies, credit unions, life insurance companies, friendly societies and trustees of public-offer super funds can all offer first home saver accounts.

Not all first home saver accounts are the same. Before you choose an account, you should read the account's product disclosure statement (PDS), which the account provider can give you.

Building your account

Once you've opened an account, you can make personal contributions. Other people (such as your parents or other family members) can also help you out by contributing to your account.

If you close your first home saver account to buy or build your first home and the purchase or construction does not eventuate, you can open a new first home saver account within six months of closing the old one.


Catches?

  1. To withdraw your funds, you need to meet a condition for release and you can't just withdraw some of your money - you must withdraw the full amount and close the account.
  2. If you change your mind about buying a home, you cannot simply close your account, withdraw your funds and spend the money. You must close your account and transfer the balance to your superannuation (unless you are aged 60 or over in which case the balance can be transferred directly to you).
  3. You have to keep the money there for a minimum period of time. Once that time has passed and you make the decision to buy or build your first home, you have to withdraw all the money at once and close the account. You need to use the money you save as a deposit or to meet other costs you incur in buying or building your first home. The minimum qualifying period is four years from when you buy your home, but you can count: A) Any previous years where you contributed at least $1,000;  B)  the year you bought your home.
  4. Your first home saver account is an individual account, not a joint account. However, if you want to buy a home jointly, you can do so whether or not the other joint buyers have a first home saver account.
  5. There is a limit as to how much can go into the account. For the 2011-12 financial year, the cap is $85,000.





 


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