If you are planning to purchase your first home, you may be able to use your superannuation savings as a down payment. The First Home Super Savings Scheme (FHSSS) enables you to use a sizable percentage of your super savings to purchase your first residential property.

What you can know about the First Home Super Saver Scheme?

In 2017, the Australian federal government announced a new scheme that allowed first-time homebuyers to use their superannuation to pay for a housing loan deposit. The plan covers all voluntary SMSF contributions made since the time of July 2017.

According to this scheme, as a first-time home buyer in Australia, you can use your self-managed superannuation to release up to $15,000 of your voluntary contributions every year and up to $30,000 in total for your first home purchase deposits.

This scheme has grown in popularity due to the advantages of earning a higher return rate while paying less tax on funds.

Eligibility criteria for the First Home Super Saver Scheme

• The main eligibility criteria for the FHSSS are that the participant should not have purchased any property before the application. Including investment properties and vacant land. However, because eligibility is determined individually, couples, siblings, etc… can all apply for FHSSS to buy the same property.
• Essential criteria are that you have to be 18 or older to request a fund release through the FHSS scheme. Apart from that, the home you buy or build must also be located in Australia.

It should be noted that superannuation guarantee contributions made by an employer or via married couple contributions cannot be accessed through the FHSSS. You can only use your superannuation as a first-time property purchaser. If your application is denied, you cannot apply again.

When should you apply?

If you’re thinking about taking this route, you could request the release of your FHSSS contributions when you begin the home-buying process, such as applying for a mortgage.

If you’ve already signed an agreement for your home, you must submit a valid release request within 14 days of signing it.

After submitting a valid release request, you must sign a contract and notify your super fund within 12 months. If you do not sign an agreement within the said time frame, the money will bounce back to your self-managed super funds.

After requesting a release of funds, it would require 15 to 25 working days to receive your funds, so it is best to plan accordingly.

Can you apply for superannuation again?

It is sporadic to receive funds from your super fund to purchase a second home or property. However, if you are experiencing financial troubles and have lost all of your previous property, you may be eligible to apply for the FHSS scheme under the following conditions:

• Bankruptcy
• Divorce or separation from a partner
• Loss of employment
• Illness
• Victims of natural disaster

What is the relation between SMSF and the FHSS scheme?

There is a stark increase in the number of people who are taking control of their superannuation by establishing an SMSF fund. It allows them to choose when and where their super is invested.

A self-managed super fund (SMSF) is retirement savings account that you manage rather than managed by a superannuation provider.

The self-managed superannuation method allows you to be more involved in what you invest in. It also providing tax advantages that significant providers do not.

When purchasing your SMSF property, note that you can directly apply for the FHSS scheme. This allows you to receive eligible contributions from the Australian government.

SMSF participants that couples can both take the FHSS Scheme for purchasing their first home. This means a couple can borrow up to $60,000 from their funds to help them buy their first home.

Even if they do not purchase a home, individuals in higher tax brackets may benefit from participating in the FHSS Scheme.

SMSF Property rules

Using a self-managed fund to invest in the real estate market allows you to invest in all property types. It includes residential, commercial, and industrial.

However, you must consider which property class is best for you and follow the rules.

Any property in which you invest must:

• Pass the sole purpose test, which means it is maintained solely to provide retirement benefits to its members.
• Should be utilized by the member-only and not and family related to the member.
• Cannot be purchased from a related party.
• Cannot be rented by a person or entity related to a fund member.

Before you indulge in purchasing SMSF property, it is essential to know what SMSF is and its schemes. The process can stress you. If you aren’t sure about the methods, any mistake can cost you heavily. It is best to take the advice of a professional who is well-versed with every update.

The estate planners help you make the best decisions regarding your self-managed superannuation and investing in your SMSF fund. To know more about the services provided, check out their website at https://www.smsfservicesperth.com.au/.