How the FHSSS works
The First Home Super Saver Scheme is a tax-effective way to save for your first home through your superannuation account.
The mechanism: 1. Contribute voluntarily to super: salary-sacrificed (concessional) or after-tax (non-concessional) contributions 2. Concessional contributions are taxed at 15% in super (vs your marginal rate 19-47%) 3. The contributions and "associated earnings" (calculated by ATO) grow inside super 4. When ready to buy: apply to ATO for a release determination 5. Withdraw up to $50,000 (lifetime cap) plus deemed earnings 6. Pay tax on the withdrawal at your marginal rate minus a 30% tax offset
Limits: • Maximum eligible contributions: $15,000/year • Maximum total release: $50,000 + earnings (lifetime cap) • Couples: each can use FHSSS = $100,000 combined • Must be 18+, never owned property in Australia, intend to occupy home for at least 6 months in first year
Why FHSSS beats taxable savings
Compare two strategies for saving $50,000 for a deposit, on a 37% marginal income tax rate:
Strategy A: regular savings account: • Need to earn $79,365 gross to net $50,000 (at 37%) • Plus interest taxed at marginal rate every year
Strategy B: FHSSS via salary sacrifice: • Sacrifice $58,824 from gross income (over 4 years at $14,706/yr) • 15% super contributions tax: $8,824 • Net into super: $50,000 • On release: tax at marginal (37%) minus 30% offset = 7% on the released amount • 7% × $50,000 = $3,500 tax on release • Total tax: $8,824 + $3,500 = $12,324
Strategy A total tax: $79,365 - $50,000 = $29,365 in income tax (plus interest tax over years).
Saving with FHSSS: $29,365 - $12,324 = roughly $17,000 saved per person on $50K. For a couple: $34,000+.
Worked example: couple buying first home
Adam and Maria are saving for a first home. Both earn $90,000/year (32% marginal + 2% Medicare = 34%).
Plan: each salary-sacrifices $15,000/year for 3 years 4 months (~$50K each).
Year 1-3 each: • Sacrifice $15,000 → super tax 15% = $2,250 to ATO • Net into super: $12,750 • Without FHSSS, that $15,000 gross would have been $9,900 net (after 34% tax)
Tax saving each year per person: • Income tax saved: $15,000 × 34% = $5,100 • Super tax paid: $2,250 • Net tax saving: $2,850/year
Over 3.33 years, per person: 3.33 × $2,850 = ~$9,500
On withdrawal: pay marginal (34%) minus 30% offset = 4% on the released amount • Release $50,000 + earnings ($5,000): tax = 4% × $55,000 = $2,200
Net advantage per person: $9,500 - $2,200 = $7,300 Couple total advantage: ~$14,600 in their pocket vs taxable savings.
Plus: super earnings tax-protected (15% vs marginal 34% on bank interest) over 3+ years adds further compound advantage.
Application process and timeline
Step-by-step:
1. Make eligible contributions over time (concessional or non-concessional). Notify your super fund that contributions are FHSSS-eligible (form: Notice of intent to claim a deduction).
2. Apply for FHSS Determination via myGov / ATO online. ATO calculates the maximum release amount including deemed earnings.
3. Apply for release: once you have a Determination, apply to release the funds. ATO processes within ~25 business days.
4. Withhold tax: ATO withholds tax (marginal rate minus 30% offset) and pays the net amount to your bank.
5. Sign contract within 12 months: must sign a contract to buy or build a home within 12 months of release. 12-month extension possible (ATO discretion).
6. Occupy within 12 months of settlement: must intend to live in the home for at least 6 months of the first 12 months.
Penalty if you don't buy: must either (a) recontribute the released amount (less tax) to super, or (b) keep the released amount but pay 20% additional tax. Rules updated 2022 to make this less punitive than original 100% additional tax.
Common pitfalls and edge cases
1. Concessional cap conflict: $15,000/year FHSSS contributions counts against your overall $30,000/year concessional cap (2026 cap). If your employer SG already takes ~$10,000 of that cap, you only have $20K left for sacrifice. Don't exceed it - excess concessional contributions get taxed at marginal anyway.
2. Couples buying together: each spouse can use their own $50K. But you must both meet the never-owned-property condition individually. One spouse who owned a property previously disqualifies that spouse but not the other.
3. Timing the contribution year: contributions made in the current year don't count for FHSSS until the next financial year - plan ahead. ATO wants to see contributions "committed" before release.
4. "Associated earnings" deemed rate: ATO uses 90-day Bank Bill rate + 3% as the deemed earnings rate. In practice: ~7% per year (2026). You don't get actual investment returns - you get the formula rate, regardless of how your super performed.
5. State stamp duty doesn't change: FHSSS is a Commonwealth scheme. State first-home concessions / stamp-duty exemptions are separate - check your state.
6. Defence force / regional first-home grants: stack on top of FHSSS. Don't miss state-level $10K-$30K first-home buyer grants.
Run the math for your situation
Use our 🇦🇺 Australia calculator to plug in your own numbers and see exactly what you owe / save.