The First Home Super Saver Scheme: A Quietly Powerful Deposit Hack

How first home buyers can use concessional super contributions to build a deposit faster and pay less tax along the way.

Saving a home deposit out of after-tax income is one of the hardest things a first home buyer does. Every dollar you set aside has already been taxed at your marginal rate, which for many buyers sits at 32 percent or higher once the Medicare levy is included. The First Home Super Saver (FHSS) scheme lets you redirect part of that saving into superannuation, where it is taxed far more lightly, then pull it back out for your deposit. Used well, it is one of the few genuinely legislated tax advantages available to people who have never owned a home.

The core idea

The scheme lets you make voluntary contributions to your super fund and later withdraw them, plus deemed earnings, to buy or build your first home. The advantage comes from where the saving happens. A concessional (before-tax) contribution, such as salary sacrifice, is taxed inside super at 15 percent instead of your marginal rate. For someone earning around 95,000 dollars, that is a 15 percent contributions tax against a 32 percent marginal rate, so the money entering super is taxed 17 cents in the dollar more lightly than money saved in a regular bank account.

When you withdraw the money for your deposit, the released amount is added to your assessable income and taxed at your marginal rate, but a 30 percent tax offset is applied. For most buyers the net effect is still a meaningful saving compared with saving the same money outside super.

The numbers that matter for FY2025-26:

Item	FY2025-26
Max voluntary contributions released per year	15,000 dollars
Max total released across all years	50,000 dollars
Concessional contributions cap (total)	30,000 dollars
Releasable portion of concessional contributions	85 percent
Releasable portion of non-concessional contributions	100 percent
Tax offset on withdrawal	30 percent

Note: the 15,000 and 50,000 dollar limits apply to your FHSS eligible contributions only. They sit inside your normal concessional cap of 30,000 dollars, which also includes your employer Super Guarantee. The higher your compulsory super, the less room you have to salary sacrifice toward FHSS.

A worked example: bank account versus super

Take a buyer earning 95,000 dollars who decides to put aside 15,000 dollars of pre-tax income toward a deposit each year for three years. The question is whether to save it in a regular savings account or route it through super using the FHSS scheme. The same pre-tax commitment produces very different results.

The savings account path. The 15,000 dollars is taxed at the 32 percent marginal rate first, so only 10,200 dollars lands in the account each year. Interest at around ~4.5 percent is then also taxed at 32 percent. After three years the buyer has roughly 32,500 dollars.

The FHSS path. The 15,000 dollars is salary sacrificed and taxed at just 15 percent inside super, so 12,750 dollars works for the buyer each year. Of the concessional contributions, 85 percent is releasable, and deemed earnings accrue at the shortfall interest charge rate (6.96 percent per year for the April to June 2026 quarter). On withdrawal the released amount is taxed at the marginal rate with a 30 percent offset, leaving an effective withdrawal tax of about 2 percent. After three years the buyer has roughly 42,950 dollars available for the deposit.

Figure 1: Same 15,000 dollars of pre-tax income saved each year. Illustrative only; assumes a 4.5 percent savings rate, FY2025-26 thresholds, and the current deeming rate.

The difference is roughly 10,400 dollars over three years, for the exact same amount of income set aside.

Most of that gap is the contribution-tax saving on the way in. Each 15,000 dollar salary sacrifice puts 12,750 dollars of releasable money to work, against only 10,200 dollars after tax in the bank. Lighter tax on earnings inside super, and the 30 percent withdrawal offset, do the rest. Deemed earnings are also calculated on a notional ATO rate rather than your fund's actual return, which currently works in a saver's favour.

How the process actually runs

• Make voluntary concessional contributions to your super (salary sacrifice or a personal deductible contribution you claim).

• When you are ready to buy, apply to the ATO for an FHSS determination through myGov. This tells you your maximum release amount.

• Submit a release request. The ATO withholds tax, contacts your fund, and pays the balance to your bank account, usually within 15 to 25 business days.

• Sign a contract to buy or build within 12 months of the release. You can also apply for release up to 90 days after signing a contract.

Where it goes wrong

The common traps:

• Exceeding the 30,000 dollar concessional cap once Super Guarantee is counted, triggering excess contributions tax.

• Requesting a release before you are genuinely ready to buy, then failing to sign a contract inside 12 months. The money goes back into super or attracts a 20 percent FHSS tax.

• Assuming the withdrawal is tax-free. It is concessionally taxed, not exempt.

• Forgetting the first-in first-out and contribution-ordering rules, which change how much is actually releasable.

• Not coordinating with a partner. Eligibility is individual, so a couple can each release up to 50,000 dollars toward the same property, but only if both have contributed correctly.

If this idea interests you, I would encourage you to see the ATO's guidance: https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/early-access-to-super/first-home-super-saver-scheme

Disclaimer

This article is for informational and educational purposes only. It contains general information about Australian tax and structuring matters and does not constitute personal tax, financial, or legal advice. The content does not take into account your particular objectives, financial situation, or specific needs, and you should not rely on it as a substitute for advice tailored to your circumstances.

Tax laws, rates, thresholds, and proposed reforms referenced in this article are current as at the date of publication and may change without notice. Any examples or modelling are illustrative only and use simplifying assumptions that may not reflect your situation.

For individualised advice on property structuring, capital gains tax, land tax, or any other matter discussed, please contact Felix Margraf at Margraf Advisory Partners on 0431 409 045 or felix@margraf.com.au.

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