Property

First Home Super Saver Scheme: The Government Hack You're Not Using

Save your house deposit inside super, pay less tax, and get a 30% bonus. Yes, really.

Published by NoBS Finance · 28 June 2026 · 6 min read

Key Takeaways

The FHSSS lets you save for a first home deposit inside super, where contributions are taxed at 15% instead of your marginal rate.
You can contribute up to $15,000 per financial year and withdraw up to $50,000 across all years.
On withdrawal, the tax is your marginal rate minus a 30% offset, which means many middle-income earners pay little or no withdrawal tax.
FHSSS contributions count towards your regular concessional contributions cap ($30,000 for 2025-26, $32,500 from 1 July 2026).
You must live in the property for at least 6 months within 12 months of purchase, and you must sign a contract within 12 months of receiving the funds.

The FHSSS: A Genuine Government Hack

Most government schemes are complicated for no reason. The First Home Super Saver Scheme (FHSSS) is one that is actually worth the paperwork. It lets you save for a first home deposit inside superannuation, where the money is taxed at a lower rate than your normal income tax. When you are ready to buy, you withdraw the money to use as part of your deposit.

How It Works

You make voluntary concessional contributions to your super fund. These are pre-tax contributions, either through salary sacrifice with your employer or by making personal contributions and claiming a tax deduction. The money goes into super and is taxed at 15% (the contributions tax) instead of your marginal income tax rate.

When you are ready to buy, you apply to the ATO to release the money. You can withdraw your voluntary contributions plus associated earnings, less a small amount of tax on withdrawal.

The Tax Advantage

The benefit comes from the gap between your marginal income tax rate and the 15% contributions tax inside super. For someone earning between $45,001 and $135,000 in the 2025-26 financial year, the marginal rate is 30%. By putting money into super first, you pay 15% tax on it instead of 30%. That is a 15 percentage point difference on every dollar you contribute.

When you withdraw the money to buy your first home, the ATO applies a withdrawal tax. This is calculated as your marginal rate minus a 30% non-refundable offset on the assessable portion. For most people on middle incomes, the combined effect is that you pay significantly less tax than if you had saved the same amount in a regular bank account using after-tax dollars.

Hypothetical Example: $90,000 Income, $15,000 Per Year for 3 Years

Hypothetical example: Say you earn $90,000 in the 2025-26 financial year and you contribute $15,000 per year to super under the FHSSS for 3 years. The 2% Medicare levy is not included in this calculation. Individual circumstances can affect the result.

Without the FHSSS, saving in a regular bank account:

Your $15,000 is taxed at your marginal rate of 30% before it reaches your bank account
Income tax on that $15,000: $15,000 x 30% = $4,500
Money in your bank account: $15,000 minus $4,500 = $10,500 per year
Over 3 years: $31,500 saved

With the FHSSS, saving inside super:

Your $15,000 goes into super and is taxed at 15% contributions tax
Contributions tax: $15,000 x 15% = $2,250
Net amount in super: $15,000 minus $2,250 = $12,750 per year
Over 3 years: $38,250 contributed (before investment earnings)
On withdrawal, the assessable portion is taxed at your marginal rate minus a 30% offset
If your marginal rate is 30%: withdrawal tax rate is 30% minus 30% = 0% on the assessable portion
If your marginal rate is 37%: withdrawal tax rate is 37% minus 30% = 7% on the assessable portion

The exact withdrawal tax depends on your income in the year you withdraw, how the ATO calculates the assessable and tax-free portions, and whether your marginal rate has changed. The ATO provides a calculator on their website to estimate your specific outcome.

The key point: you are saving tax at 15 percentage points on the way in, and the withdrawal tax is reduced by the 30% offset. For most middle-income earners, the net tax saving is substantial compared to saving in a regular account.

The Limits

Maximum of $15,000 of eligible voluntary contributions per financial year
Maximum of $50,000 across all years combined that can be withdrawn
You must be buying your first home (there are specific eligibility rules around what counts as a first home)
You must intend to live in the property for at least 6 months within the first 12 months of purchase
Your FHSSS contributions count towards your regular concessional contributions cap ($30,000 for 2025-26, $32,500 from 1 July 2026), which also includes your employer's Super Guarantee contributions

How to Do It

Make voluntary concessional contributions via salary sacrifice with your employer, or make personal contributions and notify your fund you intend to claim a tax deduction
Keep records of your contributions. You need to know which contributions count towards the FHSSS
When you are ready to buy, apply to the ATO through myGov to release the funds
The ATO will calculate the maximum release amount and any withdrawal tax
Use the released money for your deposit
You must sign a contract to purchase or build your home within 12 months of receiving the funds, or the ATO will treat the withdrawal as a normal super release and tax it accordingly

Who It Is NOT For

People close to retirement. Once you withdraw, that money is no longer compounding inside super for your retirement. If you are within a few years of retiring, keeping the money in super may be more valuable.
People who need the money in under 12 months. The release process takes time, and if your plans change, getting the money back into super is not straightforward.
People who might buy with a partner who is not a first home buyer. If your partner has previously owned property, you may not be eligible. Check the ATO's eligibility rules carefully.
People who have already exceeded their concessional contributions cap. FHSSS contributions count towards the same cap.

The Catch

It adds complexity. You will deal with the ATO and your super fund. The withdrawal tax calculation is not simple and depends on your income in the year you withdraw. But for someone saving a $50,000 deposit, the tax saving can be worth several thousand dollars. For most first home buyers with a long enough time horizon, the paperwork is worth it.

Once you've saved your deposit, the next question is how much you should actually borrow. The bank's number isn't necessarily your number. Work out how much mortgage you can really afford before you sign.