First Home Super Saver Scheme (FHSSS): How to Use Super for a Deposit

The First Home Super Saver Scheme (FHSSS) allows first home buyers to save for a home deposit inside their superannuation fund, taking advantage of the concessional tax rate on super contributions. Instead of saving in a bank account where your contributions come from after-tax income, you can salary sacrifice into super and pay only 15% contributions tax instead of your marginal tax rate.

You can contribute up to $15,000 per financial year and withdraw a maximum of $50,000 in total (plus deemed earnings) when you're ready to buy your first home. The scheme was introduced in the 2017-18 federal budget and has been available since 1 July 2018. It's one of the most tax-effective ways to save for a deposit, particularly for middle and higher-income earners who benefit most from the tax rate differential.

The tax savings from the FHSSS depend on your marginal tax rate. If you earn $90,000 per year, your marginal rate (including Medicare levy) is approximately 34.5%.

By salary sacrificing $15,000 into super instead of saving it from after-tax income, you save $15,000 x (34.5% - 15%) = $2,925 in tax per year. Over three years, contributing the maximum $45,000, you save approximately $8,775 in tax compared to saving in a regular bank account. When you withdraw the funds, they're taxed at your marginal rate minus a 30% offset, which typically results in a low effective tax rate.

Don't skip this part. The ATO also applies a deemed earnings rate (the 90-day bank bill rate plus 3%) to your contributions, providing a reasonable return. All up, the FHSSS can boost your deposit savings by $8,000 to $12,000 over three to four years compared to saving through a standard bank account.

To be eligible for the FHSSS, you must be at least 18 years old, have never owned property in Australia (including investment property), and have not previously made an FHSSS withdrawal. You must intend to live in the property you buy as soon as practicable, and you must occupy it for at least six of the first twelve months after buy.

The scheme is available to individuals, so a couple buying together can each contribute and withdraw up to $50,000, giving them a combined boost of up to $100,000. There's no income test for eligibility. You don't need to be an Australian citizen — permanent residents and certain visa holders are also eligible.

Importantly, you must request a determination from the ATO before signing a contract to buy, and you've 12 months from the date of the determination to sign a contract.

Step 1: Start making voluntary contributions to your super fund, either through salary sacrifice (pre-tax) or personal after-tax contributions that you claim as a tax deduction. Ensure your total concessional contributions (including employer SG) don't exceed the annual cap of $30,000.

The practical side: Step 2: Keep track of your FHSSS-eligible contributions — only voluntary contributions made after 1 July 2017 count. Step 3: When you're ready to buy, log into your myGov account linked to the ATO and request a FHSSS determination. This tells you the maximum amount you can withdraw.

Step 4: If you're happy with the amount, request a release. Step 5: The ATO instructs your super fund to release the funds, which are paid to you. Step 6: You must sign a contract to buy or build within 12 months of requesting the release.

The entire process from request to receiving funds takes approximately 15 to 25 business days.

The most common mistake is exceeding the $15,000 annual cap or the $50,000 total cap for FHSSS contributions. Only voluntary contributions count — your employer's SG contributions are not eligible for release.

Another pitfall is requesting a release before you've found a property, as you only have 12 months to sign a contract after receiving the funds. If you don't buy within 12 months, you must either return the funds to super (and lose the tax benefit) or pay an FHSSS tax of 20% on the amount. Some buyers also forget that the withdrawal is taxed — it's not completely tax-free.

What actually happens: The amount withdrawn is added to your assessable income with a 30% tax offset applied. Timing the release to align with your settlement date is also important, as the 15 to 25 business day processing time can create delays if not planned in advance. Keep that in mind.

The FHSSS is most beneficial for individuals on marginal tax rates above 30%, who can commit to regular salary sacrifice contributions for at least two to three years, and who are disciplined about not needing access to those funds in the interim. For someone earning $70,000 to $120,000 and saving consistently, the scheme can add $6,000 to $12,000 to your deposit compared to saving in a standard bank account.

However, the administrative complexity, rigid timelines, and restrictions on withdrawal may not suit everyone. If you're unsure when you will buy or might need access to your savings for other purposes, a high-interest savings account provides more flexibility. Use our Savings Goal Calculator to model how quickly you can reach your deposit target with and without the FHSSS, and consult a financial adviser if you're unsure whether the scheme is right for your situation.