The Federal Government has released draft legislation on First Home Saver Accounts for public comment that will allow savings in such accounts to be paid into an approved mortgage after the end of a minimum qualifying period, rather than requiring it to be added to a superannuation account.

The change is designed to make the savings account more flexible for first home buyers – allowing them to choose when to buy a house and still direct the full benefits to the scheme towards their home.

First Home Saver Accounts provide a means of saving for home deposit, that combines government contributions and tax incentives. Under the scheme, the government contributes 17% on the first $5,500 of individual contributions made each year. As well First Home Saver Account interest earnings are taxed at 15% and withdrawals are tax free when they are used to purchase a first home.

Currently, account holders are required to keep their savings in a First Home Saver Account for four financial years before they are able to use those savings to buy a home. Should the account holder purchase a home prior to that four year deadline the balance of their account savings are to be transferred to their superannuation.

The changes will apply to houses purchased after the amended legislation has passed, and will also be applicable to accounts opened before Royal Assent. Consultation closes on 4^th November.  

If you are a first home buyer there may be other benefits available for you. To discuss this matter and any other queries contact me on 0749722081 or via email at jwhitten@ihl.net.au.