The First Home Super Saver scheme

The First Home Super Saver scheme, usually shortened to FHSS, lets you save part of your deposit inside your super fund instead of a bank account, then take it out to buy your first home. The money isn't a grant. It's your own, and the benefit is entirely in how it's taxed: less going in, and less coming out than you would pay on the same money as wages.

For most people on an ordinary income that difference is worth a few thousand dollars over the life of the saving. It comes with rules about what counts, a fixed order of steps, and deadlines that cost you money if you miss them. This chapter is the scheme in full. If you only want the number, the FHSS calculator works it out on your income.

How the scheme works

You make voluntary contributions to your super: by salary sacrifice, or as a personal contribution. Later, when you're ready to buy, you ask the ATO to work out how much of that you can have back, then ask for it to be released. The ATO collects it from your fund, takes out tax, and pays the rest into your bank account.

The saving comes from two places. Salary-sacrificed money is taxed at 15% when it goes into super, rather than at your marginal rate. When it comes out, it is taxed at your marginal rate less a 30% offset. While it sits there, the ATO credits it with deemed earnings at the shortfall interest charge rate, whatever your fund actually earns.

Who can use it

You assess yourself against all of these. Each person is assessed separately, so a couple, siblings or friends buying together can each use their own FHSS savings on the same home, and one of them having owned property before doesn't stop the others.

• You're 18 or over when you ask for a determination. Contributions made before you turned 18 can still count.
• You have never owned property in Australia. That includes an investment property, vacant land, commercial property, a lease of land or a company title interest. There is a narrow exception for people who lost a property through financial hardship.
• You haven't had an FHSS release before. You get one release, ever.
• Your name goes on the title of the home you buy, and you intend to live in it as soon as practicable, for at least 6 of the first 12 months.

You don't need to be an Australian citizen or a tax resident. You can't use it to buy a houseboat, a motor home, vacant land on its own, or anything that can't be lived in. You can use it to build, provided the land hasn't become yours before you ask for the determination.

How much you can put in, and what counts

What you get back depends on the kind of contribution:

• Salary sacrifice, and personal contributions you claim a tax deduction for (concessional): 85% comes back, because the fund has already taken the 15% contributions tax.
• Personal after-tax contributions you don't claim a deduction for (non-concessional): 100% comes back.
• Plus deemed earnings on both kinds, worked out by the ATO at the shortfall interest charge rate, not at your fund's actual return.

Salary sacrifice also counts toward your $32,500 concessional contributions cap for 2026-27, along with your employer's 12% super guarantee. Contributions above that cap can't be released under the scheme, so on a high salary the room for FHSS salary sacrifice can be less than $15,000.

After-tax contributions get no tax break going in, so the only advantage they give you is the deemed earnings, taxed lightly on the way out. The scheme is really built around salary sacrifice, and that's what the worked example and the calculator assume.

What it saves you: a worked example

Take someone earning $90,000 who sets aside $10,000 of salary for a deposit. Their marginal rate, with the Medicare levy, is 32%.

That is $1,530 more deposit from the same $10,000 of salary. Do it for five years, to the $50,000 cap, and the gap is several times that. Here's the same year at other incomes:

The scheme pays least at the bottom. Below $45,000 the income tax rate is 15%, the same as the contributions tax, so most of the gain going in disappears. Below the $18,200 tax-free threshold you would pay more tax in super than on the same money as pay.

Getting the money out, step by step

The order matters, and so does the timing. All of it is done in ATO online services through myGov, under Super, then Manage, then First home saver.

1. 01

   Ask the ATO for a determination

   This tells you the most you can have released. Most of your contributions are pre-filled from what your fund reports; check them against your fund's statement, not your payslips, because it's the date the fund received each contribution that counts. You must do this before the property becomes yours, which in practice means before settlement. Once you own it, you can't ask.

2. 02

   Request the release

   Choose the amount, up to the maximum on your determination, the fund or funds it comes from, and the bank account it goes to. You get one release request, so ask for everything you want. You can make it before you sign a contract, or within 90 days after signing. Later than that and FHSS tax applies.

3. 03

   Wait for the money

   Usually 15 to 20 business days. The ATO withholds tax first, and takes out any debt you owe the ATO or another Commonwealth agency, which can reduce the payment, sometimes to nothing, and slow it down.

4. 04

   Sign a contract, and tell the ATO

   You have 12 months from your release request to sign a contract to buy or build. The window opens 90 days before the request, so a contract signed shortly before counts. Tell the ATO within 90 days of signing. The ATO can extend the 12 months by up to another 12, and generally does without being asked.

5. 05

   Move in, and lodge your tax return

   Live in the home for at least 6 of the first 12 months from when it's practicable to. Put the amounts on your FHSS payment summary in your tax return for the year you requested the release, which can be a different year from when the money arrived.

How the release is taxed

The part of the release that is taxed, the assessable FHSS released amount, is the concessional contributions that come back (the 85%) plus all of the deemed earnings. Your after-tax contributions come back tax-free. The assessable part is added to your income for the year you request the release and taxed at your marginal rate, less a 30% tax offset.

The ATO withholds tax before it pays you: your expected marginal rate including Medicare less 30%, or 17% if it can't estimate your rate. The final figure is settled in your tax return, where the ATO works out your actual rate for that year and credits what was withheld.

Because the assessable amount is added to that year's income, a large release in a year you also earn well can push part of it into a higher bracket. It doesn't count as income for family assistance or child support, or toward study loan repayments.

If you don't buy

Plans change, and the scheme allows for it, at a price. If you haven't signed a contract by the end of the period the ATO allows, 24 months from your request at the most, you have two choices:

If you never ask for a release at all, nothing happens: the contributions simply stay in your super until you retire or meet another condition of release.

How it fits with the other schemes

The FHSS scheme is run by the ATO and is separate from everything in how the government can help. Once released, it's money in your bank account toward your deposit and costs, which you then use alongside whatever else you qualify for.

• State grants and stamp duty concessions. The ATO says using them doesn't affect your access to the FHSS scheme. Whether the FHSS scheme affects them is up to each state, so check with your state revenue office.
• The 5% Deposit Scheme. A different scheme, applied for through a participating lender. The FHSS money can be part of the deposit you bring to it; ask your lender or broker how they will want to see it.
• Help to Buy. Also separate. Its eligibility rules, including income caps, are its own.

When it doesn't suit you

It's a good deal for a lot of first home buyers. It's a poor fit for some, and it's worth being honest with yourself about which you are before money goes in.

• You might not buy. Money in super is locked away until you either release it under the scheme or retire. If there's a real chance you won't buy a home, the flexibility of a savings account is worth more than the tax saving.
• You're on a low income. As above: below $45,000 the tax gap is small, and below $18,200 it runs the wrong way.
• You're buying within weeks. The saving builds over years, and the release itself takes three to four weeks. A few months of contributions won't be worth the paperwork.
• Your pay is tight. Salary sacrifice reduces your take-home pay now. Lenders look at what you earn and spend, so check it doesn't squeeze a budget you also need to borrow against.
• You have a study loan. Salary sacrifice counts toward your HELP repayment income in the year you contribute, so your compulsory repayment may not fall the way your take-home pay does. Check your withholding with your employer.
• Your fund won't play along. Not every fund releases FHSS amounts, and fees or insurance inside the fund can be affected. Ask your fund before you start.