The Government will help Australians trying to realise the dream of home ownership by allowing First Home Saver Account-holders more flexibility to buy their first home.
First Home Saver (FHS) Accounts provide a simple, tax effective way for Australians to save for their first home through a combination of government contributions and low taxes.
Currently, an FHS Account holder is required to keep their savings in an FHS account for four financial years before they are able to use those savings to buy a home. If the account holder buys a home prior to the end of that four year period, the balance of their FHS Account must be transferred to their superannuation so that it remains in a concessionally taxed environment.
To increase the flexibility of FHS Accounts and help Australians buy their first home sooner, the Government will allow savings in an FSA Account to be paid into an approved mortgage after the end of a minimum qualifying period, rather than requiring it to be paid to a superannuation account.
The Government will release draft amendments for consultation over the coming months.
The changes will apply for houses purchased after Royal Assent of the legislation giving effect to this change.
FHS Accounts will still offer all the existing concessions to help Australians buy their first home:
The Government contributes 17 per cent on the first $5,000 (indexed) of individual contributions made each year. That means an individual who makes a contribution of $5,000 to their FHS Account will be eligible for a Government contribution of $850.
There is a cap of $75,000 (indexed) on the overall FHS Account balance. If an individual reaches the cap, no further individual contributions can be made by the FHS Account-holder. However, the FHS Account interest earnings and outstanding government contributions will still be credited to the FHS Account after this time, allowing the account to continue to grow.
Individuals who are members of a couple will be able to pool their FHS Accounts to purchase a home together.
Earnings are to be taxed at 15 per cent and withdrawals will be tax free where they are used to purchase a first home.
This major improvement to First Home Saver Accounts will help Australians buy their first home sooner.