Saving for a House? Don't Use a Bank Account! The 'FHSS' Trick to Save $30,000 Faster
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| Saving for a House? |
You want to buy your first home in Sydney or Melbourne. You are diligently saving $1,000 a month into a high-interest savings account. You think you are doing the right thing.
You are wrong. By saving in a regular bank account, you are paying unnecessary tax and slowing down your progress.
The Australian Government offers a "cheat code" for first home buyers called the First Home Super Saver (FHSS) scheme. If you aren't using it, you are saying no to free money.
What is the FHSS Scheme?
The FHSS scheme allows you to make voluntary contributions into your Superannuation fund to save for your home deposit.
Why would you lock your money in Super? Because you can withdraw it later to buy a house. And the tax benefits are massive.
- Bank Savings: You earn your salary, pay income tax (e.g., 30% or 37%), and save what's left.
- FHSS Savings: You put pre-tax salary into Super. It is taxed at only 15%.
The Math: How You Get Richer (2026 Tax Rates)
Let's say you earn $90,000 a year. Thanks to the Stage 3 Tax Cuts, your marginal tax rate is 30% (+ 2% Medicare Levy = 32%).
💰 Saving $15,000: Bank vs. FHSS
Scenario A: Regular Bank Account
- You earn $15,000 gross.
- Taxman takes 32% ($4,800).
- You save: $10,200.
Scenario B: FHSS (Salary Sacrifice)
- You put $15,000 into Super.
- Super Fund takes 15% tax ($2,250).
- You save: $12,750.
Result: You have an extra $2,550 just by changing where you put the money.
*Note: When you withdraw, a small tax applies (your rate minus a 30% offset), but you still come out significantly ahead.
The Rules: Limits and Withdrawal
It sounds too good to be true, but there are strict limits you must follow.
| Rule | Details |
|---|---|
| Annual Limit | You can release up to $15,000 of voluntary contributions from each financial year. |
| Lifetime Limit | The maximum you can release across all years is $50,000 per person. |
| The "Cap" Warning | Total contributions (Employer + Yours) generally cannot exceed $30,000 per year without penalty. |
| Couples | If you buy with a partner, you can BOTH use it. (Total $100,000 deposit limit). |
Important Warning: Don't Sign the Contract Yet!
There is one critical rule that catches people out. You must apply for a "Determination" from the ATO before you sign a contract to buy a house.
- Step 1: Save money in Super via Salary Sacrifice.
- Step 2: Find a house you like.
- Step 3: Log in to myGov and request an FHSS determination (takes 2 minutes).
- Step 4: Sign the contract.
If you sign the contract first without a determination, you might encounter delays or lose access to the tax benefits. Be careful.
Chief Editor’s Verdict
If you are a First Home Buyer, using a regular savings account is a mistake.
The FHSS scheme is effectively a 15% to 17% guaranteed return on your money instantly via tax savings. Talk to your payroll officer today to set up a "Salary Sacrifice" arrangement into your Super fund. It is the fastest way to get your keys.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial advice. Tax rates and Superannuation caps (currently $30,000 concessional cap) are subject to change. Individual circumstances vary. Please consult with a qualified financial adviser or tax accountant before making voluntary super contributions.
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