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Using your super for a first home deposit

Using your Superannuation as a house deposit.

In a scheme to assist first home buyers in purchasing a property the government has implemented a scheme whereby fist home buyers may use their superannuation to help save for their deposit.

The scheme came about due to the increasing difficulties first home buyers are finding when purchasing their first property.

Difficulties have arisen due to the higher deposit required nowadays as a result of increased house prices.

The scheme effectively allows Australians to salary sacrifice some of their wages in order to save for a deposit.

By Salary sacrificing wages into a super fund, tax paid is only 15% as opposed to one’s personal tax rate.

As of July 1st, Australians will be able to sacrifice up to $15,000 per year and up to $30,000 in total (two years of contributions).

Funds are then able to be drawn and used as a deposit for a first property purchase.

In addition to salary sacrifice arrangements, individuals are also able to transfer personal contributions into their super funds for the purposes of buying their first property.

Personal contributions are paid with after tax dollars, however personal contributions will be subject to a full tax deduction from one’s income (ie, $100k wage less $15k personal contribution would equate to a taxable income of $85,000 (you can deduct the $15,000 on your tax return with your accountant)).

Once personal contributions are withdrawn (for the purposes of buying your first property), they are subject to full tax at one’s marginal tax rate less a 30 percent offset.

Whilst the savings are not huge, they are still worthwhile undertaking, especially for potential first home buyers in high tax brackets (at least you can be assured less of your hard-earned dollars are going towards welfare etc).

For more clarification, please feel free to visit your local accounting firm Melbourne.

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