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Will the Super Saver Scheme for First Home Buyers Work for You?

When the Federal Treasurer Scott Morrison delivered the 2017 - 2018 budget, there were winners and losers as usual. But for those about to take their first steps into the property market, there may have been greater wins than expected with the announcement of the Super Saver Scheme for First Home Buyers (FHSSS).

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The basics of the scheme are that first home buyers have an opportunity to save for a deposit faster, by making contributions to their superannuation. In effect, they are saving for their deposit inside their superannuation account. The FHSSS allows for voluntary contributions over $15,000 and up to $30,000 annually, via salary sacrificing. Those contributions were able to be made as of July 1st this year and withdrawals cannot be made until after July 1st next year.

So, is this a win or not? A $30,000 deposit can hardly be considered realistic in today’s property market, particularly for buyers in inner city Melbourne or Sydney. Regional buyers may have a chance however and for them it could be quite effective as a savings strategy. First home buyers outside of the metropolitan areas may appreciate the more disciplined approach to saving - assuming their salary can stretch far enough to cover the extra contributions. With property prices more consistently achievable in regional areas and the day to day cost of living more manageable, this may be a great solution for what ends up being a really specific section of the population.

Of course, $30,000 is not to be ignored as a decent start for the first home buyer. However, for those already salary sacrificing into superannuation it could lead them into dangerous territory. Make sure you look carefully at the numbers first before assuming your salary can stretch far enough to cover the extra payments.

There are also tax advantages to consider, but understanding what they are may be the most complex part of the Australian Federal budget breakdown. The average Australian shouldn’t need an economics degree to understand the impacts on pre-tax contributions, or offsets against marginal tax rates, but in this case, they may just need one – even just to understand the ATO’s overview.

The best approach is to decide if the basic principle of the scheme will work for you. Can you afford the extra contribution? Will a $30,00 deposit, that you can’t access until the middle of next year, be of any use to you with regard to your current investment plans? If any of these seem viable then find a good financial advisor who can help you unpack the tax details in a clear and concise way.

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The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions. Click here for full Terms of Use.

Topics: First Home Buyer, Buying

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