Saving a home deposit is the biggest barrier to homeownership for most first-time buyers. The First Home Super Saver Scheme (FHSSS) is a government initiative designed to help by allowing you to make voluntary contributions to your superannuation fund — and later withdraw those contributions (plus deemed earnings) to put toward a home deposit. The tax advantage is significant: instead of saving in a regular bank account where interest is taxed at your marginal rate (up to 45%), contributions inside super are taxed at just 15%. This can boost your deposit by $7,000–$12,000 compared to saving outside super.
How Does the First Home Super Saver Scheme Work?
The FHSSS allows you to make voluntary contributions to your super fund — either salary sacrifice (pre-tax) contributions or personal (after-tax) contributions — and then withdraw those contributions when you are ready to buy your first home.
Key rules and limits:
Maximum contributions: You can contribute up to $15,000 per financial year and up to $50,000 in total across all years. These limits apply only to voluntary contributions made for the purpose of the FHSSS — your employer's compulsory super guarantee contributions are not included and cannot be withdrawn.
Contribution types: Salary sacrifice (concessional) contributions — these are deducted from your pre-tax salary, reducing your taxable income. Personal voluntary (non-concessional) contributions — made from after-tax income. Both types can be withdrawn under the FHSSS, but the tax treatment on withdrawal differs.
Deemed earnings: When you withdraw, the ATO calculates deemed earnings on your contributions at the Shortfall Interest Charge (SIC) rate — approximately 4.5–5.0% as of 2026. This is not the actual investment return your super fund earned on the money — it is a standardised rate applied by the ATO. Whether this is higher or lower than your fund's actual return depends on market conditions.
Eligibility: You must be at least 18 years old, have never owned property in Australia (including investment property), intend to live in the property for at least 6 of the first 12 months, and be purchasing or building a property to live in (not an investment).
Important: The FHSSS does not allow you to withdraw your existing super balance or your employer's compulsory contributions. Only voluntary contributions made after 1 July 2017 and specifically designated as FHSSS contributions can be withdrawn.
$50,000 Maximum Withdrawal
The total amount you can withdraw under the FHSSS is capped at $50,000 in contributions (plus deemed earnings). For a couple, each person can withdraw $50,000 — giving a combined maximum of $100,000 plus deemed earnings. This represents a significant deposit acceleration when combined with the tax savings.
- ✓Maximum $15,000 per financial year in voluntary contributions
- ✓Maximum $50,000 total across all years
- ✓Only voluntary contributions can be withdrawn — not employer SG
- ✓Deemed earnings calculated at the SIC rate (approx 4.5–5.0%)
- ✓Must be 18+ and never have owned property in Australia
- ✓Must live in the purchased property for 6 of the first 12 months
- ✓Scheme available since 1 July 2018 (contributions from 1 July 2017)
How Much Tax Do You Save with the FHSSS?
The FHSSS provides two layers of tax advantage:
Layer 1 — Lower tax on contributions: If you salary sacrifice $15,000 into super, it is taxed at 15% inside the fund ($2,250 in tax) instead of your marginal rate outside super. If your marginal rate is 32.5% (income $45,001–$120,000), you save $2,625 in tax on that $15,000. If your marginal rate is 37% ($120,001–$180,000), you save $3,300.
Layer 2 — Concessional tax on withdrawal: When you withdraw FHSSS amounts, salary sacrifice contributions are taxed at your marginal rate minus a 30% offset. If your marginal rate is 32.5%, the effective withdrawal tax is just 2.5%. If your marginal rate is 37%, the effective withdrawal tax is 7%.
Worked example — $50,000 over 4 years:
Without FHSSS: You earn $15,000/year before tax ($12,500 after tax at 32.5% marginal rate including Medicare levy). After 4 years, you have saved $50,000 after tax in a savings account earning 4.5% interest (taxed at 32.5%). Total available: approximately $53,800.
With FHSSS: You salary sacrifice $12,500/year (equivalent to the same $12,500 after-tax cost to you). Inside super, $12,500 minus 15% contributions tax = $10,625 per year credited. After 4 years at deemed earnings of 4.8%: approximately $46,800 in contributions plus deemed earnings. On withdrawal, concessional contributions are taxed at marginal rate minus 30% offset (effective rate approximately 2.5%): tax of approximately $1,050. Net withdrawal: approximately $45,750.
But wait — the salary sacrifice also reduced your taxable income, saving you additional tax each year. At $12,500/year salary sacrifice over 4 years, you save approximately $2,188/year in income tax = $8,750 total. Add this to the withdrawal amount: $45,750 + $8,750 = $54,500.
Net benefit of FHSSS: approximately $700–$3,000 more than saving outside super — depending on your marginal rate, the SIC rate, and your bank interest rate. The higher your tax bracket, the greater the benefit.
Note: These are illustrative calculations. Individual results vary based on exact income, contribution timing, and the SIC rate in each period. Use the ATO's FHSSS calculator for a personalised estimate.
Maximise the Benefit at Higher Tax Brackets
The FHSSS delivers the greatest tax savings for borrowers in the 37% and 45% marginal tax brackets. If you earn $130,000+, the tax differential between your marginal rate and the 15% super rate is substantial. A couple earning $130,000 each can save approximately $6,000–$10,000 more through the FHSSS compared to saving outside super over a 3–4 year period.
Step-by-Step: How to Withdraw FHSSS Funds to Buy a Home
Step 1 — Request a FHSSS determination from the ATO: Before signing a contract to purchase property, you must request a determination from the ATO through your myGov account (linked to ATO online services). The determination tells you the maximum amount you are eligible to withdraw. You can request a determination at any time — even before you have found a property.
Step 2 — Request a release of FHSSS amounts: Once you have found a property and are ready to purchase, request a release of FHSSS amounts through myGov. You specify how much you want to withdraw (up to the maximum determined amount). The ATO then sends a release authority to your super fund.
Step 3 — Super fund pays the ATO: Your super fund processes the release authority and pays the requested amount to the ATO — not directly to you. This typically takes 15–25 business days from the request.
Step 4 — ATO pays you: The ATO withholds the applicable tax (based on your circumstances) and pays the remaining amount directly to your nominated bank account. This typically occurs within 5–10 business days of receiving the funds from your super fund.
Total timeline: From requesting a release to receiving funds is typically 20–35 business days (4–7 weeks). This timing is critical — you must plan for this delay when negotiating settlement dates.
Step 5 — Purchase the property within 12 months: You must sign a contract to purchase or build a home within 12 months of requesting the release. If you do not purchase within 12 months, you can either recontribute the funds to super or keep them — but you will pay an additional flat tax of 20% on the released amount.
Step 6 — Move in within 12 months: You must occupy the property as your principal place of residence for at least 6 of the first 12 months after settlement or the build is complete.
Common mistake: Many first home buyers request the FHSSS release too late — after signing the contract. The 4–7 week processing time means the funds may not arrive before settlement. Request the release as soon as you begin seriously looking, not after you have found a property.
Request the Release Early — Processing Takes 4–7 Weeks
The most common FHSSS mistake is timing. Super funds have up to 25 business days to process the release, plus the ATO takes additional time. If settlement is in 30 days and you have not yet requested the release, the funds will not arrive in time. Request the determination and release as soon as you are actively searching — you can hold the funds in your bank account until settlement.
Frequently Asked Questions
About the Author
Sakib Manzoor
Senior Finance Wellness Expert
Sakib Manzoor is the founder of Secure Finance and brings extensive experience in Australian mortgage broking and financial wellness. Specialising in helping clients achieve their property finance goals through personalised strategies and expert guidance, Sakib is FBAA accredited and committed to providing clear, actionable advice. All content is written to meet Australian regulatory standards and is regularly updated to reflect current market conditions.