First Home Saver Accounts
Everything you need to know about the First Home Saver Account
The Australian Government introduced the First Home Saver Account in October 2008 to help first home buyers save for their first home.
Currently several financial institutions offer the account, including ANZ, the Commonwealth Bank, AMP Banking and various online credit unions, which is great news for people saving for their first home. It's a good idea to shop around for your First Home Saver Account because some institutions are paying higher interest rates than others.
Your Mortgage Choice broker can evaluate your current situation so you can make an informed decision about whether you will benefit from a First Home Saver Account.
What's it all about?
If you meet the eligibility and savings criteria, the Government will not only tax your savings at a lower rate, but they will also contribute to them.
So what is the eligibility & savings criteria?
- be a first home buyer aged between 18 and 65
- open a special First Home Saver Account (there is no minimum deposit required)
- make personal after tax contributions of at least $1,000 a year over four years to be able to withdraw your savings tax-free and buy or build your first home.
- however, if you purchase a property before four years, you won't be able to immediately access the savings but the account will be kept open until the end of the four years and the funds released into paying off your approved home loan
- provide your Tax File Number to the account provider
What do you get?
- You can save up to $75,000
- Your savings will only be taxed at 15% instead of the usual marginal tax rate. However, if you withdraw it to purchase your property, it will be tax-free
- The tax will be paid by the account provider, not you
- The Government will contribute 17% on the first $5,000 of the contributions you make each year. So if you save $5,000 in a year you will receive a Government contribution of $850
- Withdrawals will be tax-free where they are used to purchase or build a first home to live in
- If you change your mind or your circumstances change and you decide not to buy, you can transfer your funds to your superannuation fund.
- Your can still claim the First Home Buyer’s Grant
You can find out more at the Australian Government’s First Home Saver Account site.
Talk to your Mortgage Choice broker or financial institution today.