First home buyers will be able to use their super to save up to $30,000 for a house deposit under the Federal Government’s housing affordability package.
Under the scheme first home buyers will be able to direct $30,000 over and above their compulsory employer contributions, into their super account, specifically for a house deposit.
Those contributions will attract the same tax benefits of super, with contributions and earnings taxed at 15 per cent, rather than marginal rates. Contributions are capped at $15,000 in a single year and cannot include compulsory employer contributions. These contributions count towards your $25,000 concessional cap.
The new rules take effect from 1 July 2017 and withdrawals, which will be taxed at 30 per cent below the member’s marginal tax rate, will be allowed from 1 July 2018. Money withdrawn must be used to fund a first home deposit.
Mercer Financial Advice Leader Richard Ebbs says the scheme may have the added benefit of engaging more people, particularly younger members, with their super.
“Using an existing structure like super has allowed the Government to avoid creating any extra complexity – and that’s definitely a good thing,” Ebbs says. “For the vast majority of first home buyers this would be a very suitable method of saving for that all important first home deposit.”
For a couple, both individuals can take advantage of the scheme, doubling the potential deposit.
If you’d like to speak to a Mercer financial adviser book an appointment today.