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If you are saving for your first home, a first home saver account is a good way to help you reach your goal. Each year the government will make a 17% contribution on the first $6000 you deposit. This means that if you deposit $6000 in one financial year, you will receive $1020 from the government.
Some of the main features of these accounts are:
– The interest you earn on the account is only taxed at a rate of 15%.
– You have to save at least $1000 each year over at least 4 financial years before you can withdraw the money. These 4 years do not need to be consecutive.
– The maximum account balance is capped at $90,000 but this cap will be indexed in future years. After your savings reach this level, only interest and earnings can be added to the balance.
– The money has to be used for your first home. If it is not, it is added to your super and you can’t access it until you are retired or can meet another condition of release.
– If you buy your first home before the 4-year period is up, you can withdraw the money in your account at the end of the 4-year period to put towards your mortgage. You will not be able to make any more deposits once you have built or bought a property.
You must be aged 18 to 65 years old and not have owned a house in Australia or Norfolk Island.
You must be an Australian resident for income tax purposes for at least part of the financial year.
You must use the funds to buy or build your home or pay them into your mortgage.
You must also live in the home you buy for at least six months.
You lose your eligibility to hold a first home saver account if you reach 65 years of age or start owning a home before you qualify to withdraw the balance of your account.
There’s lots more information about the First Home Saver Accounts at: http://www.ato.gov.au/Individuals/First-home-saver-account/