First home saver accounts
Help you save for your first home
If you are saving for your first home, a first home saver
account is a good way to help you reach your goal. The government
will contribute an extra amount that is a percentage of your
savings each year.
These accounts have a few rules so it's important to make sure
they are right for you.
What are first home saver accounts
and how are they changing?
Important: Proposed government changes
The Federal Government has proposed the following changes to first
home saver accounts:
- Accounts opened after 7:30pm Tuesday 13 May 2014 will not be
entitled to the government contribution
- Existing account holders will not be eligible for a government
contribution on personal deposits after the 2013-2014 financial
- Tax and social security concessions will cease 1 July 2015
- Restrictions on withdrawals will be removed on 1 July 2015
- First home saver accounts will be abolished on 1 July
Existing rules will continue to apply until the law is
Unlike other savings accounts, a first home saver account can
only be used when you are saving to buy or build your first
Currently the government makes a 17% contribution on the first
$6,000 you deposit each financial year. This means that if you
deposit $6,000 in one financial year, you will receive $1,020 from
Some of the main features of these accounts are:
- The interest you earn on the account is only taxed at a rate of
- You have to save at least $1,000 each year over at least 4
financial years before you can withdraw the money. These 4 years do
not need to be consecutive.
- The maximum account balance is capped at $90,000 but this cap
will be indexed in future years. After your savings reach this
level, only interest and earnings can be added to the balance.
- The money has to be used for your first home. If it is not, it
is added to your super and you can't access it until you are
retired or can meet another condition of
- If you buy your first home before the 4 year period is up, you
can withdraw the money in your account at the end of the 4
year period to put towards your mortgage. You will not be able
to make any more deposits once you have built or bought a
To see how these types of accounts work, use our first home
First home saver calculator
Are first home saver accounts right
Only for your first home
First home saver accounts earn high interest and you get a
government bonus to put towards your deposit. Make sure you think
hard about your future needs before opening a first home saver
account. If, for example, you decide in 3 years that you'd
rather move overseas or put the money into a new business, you
won't be able to use the money in your first home saver
The money can only be used to buy your first home and if you
decide not to use it for this purpose, it must be transferred to
your super and you won't be able to access it until you are retired
or can meet a condition of
Only for a home you live in
The funds from your first home saver account can only be
used to buy a property you intend to live in. The
occupancy rule states that you must live in the home for at least 6
months and it must be your main residence.
The 6-month period must start within:
- 12 months of you becoming the home owner (from settlement date)
- 12 months from the day construction was completed if you are
building a home
Be sure you can fulfil these rules before you open a first home
saver account. Consider other savings options if you
don't think you can meet all the criteria.
Saving with your partner
First home saver accounts can only be opened by an individual,
so if you are saving with a partner you should each open an
account. You will only have to wait until one of you reaches the
4-year savings mark to withdraw from both accounts, provided your
house is bought in both your names. If you both have accounts, you
will also both be eligible for the government contributions.
You may use your first home saver account to buy a property with
a partner who has previously owned a home as long as you are a
registered owner and this is your first home.
Case study: Alex and Tony have found their dream home
and Tony each have their own first home saver account. Alex has
been saving at least $1,000 each year for 5 years while Tony has
only had his for 2 years. But because Alex's account has been open
for 5 years, they satisfy the 4-year rule. They can combine their
savings to buy their home.
The risks of only having one account
Opening one first home saver account with your partner can be
risky. Think about what will happen if the relationship ends and
you decide not to buy a house together.
If the account is in your name, how will you repay the money you
have both saved? If the account is in your partner's name, how will
you get your money back?
Where to get your first home saver
Due to the proposed legislative change most approved deposit
taking institutions have ceased offering first home saver
Accessing the money in your
first home saver account
You will usually want to access your first home saver account
when you are ready to buy or build your first home. The Australian
Taxation Office's factsheet on accessing your
funds explains when you can access your money.
You will need to apply to your first home saver account provider
get the funds released. You will have 6 months to use these funds
towards the purchase or building of your first home. See the ATO's
factsheet on building or buying your
first home for more information.
If you are buying your first home but haven't met the conditions
to access your money, you must notify your account provider within
30 days of signing a contract to buy or build. See the ATO's
webpage on paying towards a
mortgage for more information.
First home saver accounts can be a really good
way to maximise your savings for your first home. Make sure you
understand all the rules of these accounts to decide if they are
right for you.
Last updated: 17 Jul 2014
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