Chapter 6 – Super and the First Home Deposit
Jason Clarke has been thinking that sometime soon, he would like to purchase his first home. He knows that he wants to live by the beach, because some of his mates from his football team do, but he is concerned that he will be unable to afford it.
Jason was talking to Ben, his employer about this. Ben advised Jason that Jason can use some of his super towards the purchase of a first home, but Ben does not know more than this. Ben also agreed to pay part of Jason’s salary into his super account, so that he can save it for his first home, if that is what he wanted.
Jason is excited about this and asks Ben to begin withholding payments. One week later, both major parties promised to reduce the amount that a first home buyer has to save for their deposit from 20% to 5%, with a promise that they will subsidise the rest of the amount. As the Liberal Party won the election, Jason hopes that they will keep their promise, as a 5% deposit will be easy for him to save now that he knows he can get tax exemptions from his super!
1. In 2017, legislation was passed to allow an employee to withdraw draw up to $30,000 from their super fund, to be used as a deposit for the purchase of a first home.
2. The government has promised to bring in new legislation this year to provide for first home buyers to need a deposit of only 5% for their first home purchase, and the rest of the deposit would be subsidised. The catch is this is only available to the first 10,000 home buyers and the details of this scheme are unknown at this stage.
Q and A
Q: Will I have to pay tax on the money that I am putting into my super account?
A: No! Unlike when you put money into a savings account, putting the savings into your super to purchase your first home means you won’t have to pay the same amount of income tax.
Q: What happens if I draw the money out of my super account, but don’t use it to purchase a home?
A: If you draw the money out of your super account and don’t spend it on your first home, then you will have to pay a significant fine.
How can E Berman & Co Solicitors help me?
We can assist you with your first home purchase and we can confidently claim that if you are buying a property under $1 million (and there are no complications) it is unlikely you will find a lower price from a lawyer or conveyancer for acting on the purchase of your property.
E Berman & Co Solicitors is a Chatswood law firm that has been providing quality legal services to the public since 1984. Contact our office on 9412 2493 – we’re more than happy to have a quick chat! You can also visit us on our website for more information.
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Contact Errol on 9412 2493