Stashing house deposits in super

TAPPING into stashed superannuation savings for a house deposit is now possible, but anyone who thinks they can rip out their super savings and simply buy themselves a home are mistaken. The new scheme comes with plenty of restrictions.

Headaches caused by the housing affordability crisis, particularly in the booming Sydney and Melbourne markets, prompted the Turnbull Government to announce the First Home Super Saver Scheme in this year’s Federal Budget.

And it’s finally been given the green light, so aspiring borrowers can stash extra savings alongside their retirement nest eggs and put them towards a home deposit.

Under the new scheme, individuals can make voluntary contributions of up to $15,000 per year and $30,000 in total to buy their first home. These are taxed at 15 per cent, instead of 30 per cent.

But be warned, users of the scheme cannot withdraw their existing balances, they can only withdraw extra contributions made on top of their 9.5 per cent compulsory contributions.

The Association of Superannuation Funds of Australia’s chief executive officer, Dr Martin Fahy, said funds are ready for the scheme, but individuals must make their own assessments.

“It will be up to first home buyers to decide whether the scheme is right for them in terms of the timing of when funds will be able to be accessed and whether the tax arrangements are attractive in their specific financial situation,’’ he said.

Mortgage Choice chief executive officer John Flavell said he supported schemes to help first-home buyers but was unsure FHSSS was the answer.

“The first homebuyer super saver scheme is unlikely to have a huge impact,’’ he said.

Certified financial planner Patrick Canion said it was a good way to save because of the tax benefit and it “removes the temptation to squander the money”.