First Home Saver Account

If you’re planning to save for your first home deposit over 4 years or more, the First Home Saver Account is a great way to boost your cash with a high interest rate. Rather than a traditional savings account, the First Home Saver Account functions more like a term deposit account But, it’s not for everyone so make sure you check out all the details before committing.

How Will The Government Help You Save?

  • For every dollar you save the government will add 17%, up to $5,500 in a financial year
    that’s $935 if you save $5,500!
  • Interest earned will only be taxed 15%
  • Your account provider will pay the tax so you don’t need to include it on your tax return
  • Withdrawing your money is tax free
  • You can add as little or as much as you like to your account (until you reach the cap)
  • No risk of dipping into you savings as you can’t withdraw from the account until it’s closed
  • There’s a 14 day cooling off period so if you change your mind you can withdraw your savings within 14 days

Are You Eligible?

Generally, to be eligible for the First Home Saver Account you must:

  • be at least 18 years and under 65 years
  • not previously owned a home in Australia and lived in it as your main residence
  • not previously opened a First Home Saver Account
  • be able to provide a tax file number and sufficient ID

For full eligibility criteria go to the ATO website or complete the First Home Saver Account Calculator.

So What’s The Catch?

The First Home Saver Account has some really great benefits but, it’s not for everyone. There are several things you need to consider before pouring your savings into this account to make sure it will work for your unique situation.

  • You must hold the account for a minimum 4 years
  • You can’t withdraw any funds prior to closing the account. Great for saving, not so great for emergencies.
  • Savings can only be used toward buying your first home, so no changing your mind
  • You can’t salary sacrifice, all savings must come from your after tax income
  • You must save at least $1,000 in each of 4 or more financial years before you can withdraw your money
  • If you don’t use your savings towards a home, you must transfer the funds into your superannuation account. You can only access your super after you retire.

For more details on the First Home Saver Account including eligibility, how it works and if it’s suitable for your situation go to either ato.gov.au or fido.gov.au.

If you decide this account is not suitable for you, a good option is to check out the various term deposit and high interest savings accounts in the market. We’re always happen to have a chat with you about your situation. Give us a call on 02 4226 5555.

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