Saving a home deposit while rent and living costs keep climbing is one of the toughest financial challenges in Australia. The First Home Super Saver (FHSS) scheme offers a genuine alternative to a regular savings account: it lets you build part of your first home deposit inside your super fund, where the concessional tax environment can help your money grow faster. You can contribute up to $15,000 per financial year and release up to $50,000 in total (plus associated earnings) toward your deposit — $100,000 for an eligible couple.
This guide covers how the FHSS scheme works in 2025-26: eligibility, which contributions count, the tax treatment, the step-by-step application process, and the traps to avoid. All figures are drawn from the ATO’s official FHSS guidance.
How the First Home Super Saver scheme works
The FHSS scheme is not a grant, a loan, or a separate account you open. It is a set of rules, administered by the ATO, that lets eligible first home buyers withdraw certain voluntary super contributions (plus associated earnings) and put them toward a home deposit. It covers contributions made from 1 July 2017 onwards.
The advantage comes from super’s tax environment. Voluntary concessional contributions — such as salary sacrifice — are taxed at just 15% inside the fund, well below most workers’ marginal rates. When the FHSS amount is released, the assessable portion is taxed at your marginal rate less a 30% offset. You get a double benefit: cheaper tax on the way in, and discounted tax on the way out.
Model different contribution levels with our super calculator, which projects your balance from salary, contributions and earnings rate.
Who is eligible for the FHSS scheme
You must meet all of the following conditions to use the scheme:
- Be 18 years or older when you request an FHSS determination.
- Have never owned real property in Australia — including investment properties and vacant land. Hardship exceptions exist if you lost ownership through financial hardship.
- Have never used the FHSS scheme before — one release per lifetime.
- Intend to live in the property for at least 6 months of the first 12 months from when it is practical to occupy it. Investment purchases do not qualify.
- You do not need to be an Australian citizen or resident for tax purposes.
Each person in a couple is assessed individually, so if both partners are eligible, each can release up to $50,000 — a combined $100,000 toward the same property.
Which contributions count toward FHSS
Only voluntary contributions are eligible. Money that arrives by obligation — employer SG, spouse contributions, government co-contributions — can never be released.
| Contribution type | Counts toward FHSS? | Concessional or non-concessional |
|---|---|---|
| Salary sacrifice contributions | Yes | Concessional |
| Personal voluntary contributions claimed as a tax deduction | Yes | Concessional |
| Personal voluntary contributions NOT claimed as a tax deduction | Yes | Non-concessional |
| Compulsory employer Super Guarantee (SG) contributions | No | N/A |
| Spouse contributions | No | N/A |
| Government co-contributions | No | N/A |
The FHSS scheme does not create a special contribution type — FHSS amounts are ordinary concessional or non-concessional contributions and must stay within the normal caps. For 2025-26, the concessional cap is $32,500 and the non-concessional cap is $120,000. Your employer’s SG (12% of ordinary time earnings from 1 July 2025) also counts toward your concessional cap, so leave headroom before salary sacrificing. Our super calculator shows how much SG your salary already generates.
FHSS contribution and release limits
The scheme limits both how much you can count per year and how much you can release in total:
| Limit | Amount (2025-26) |
|---|---|
| Maximum eligible contributions per financial year | $15,000 |
| Maximum eligible contributions across all years (total) | $50,000 |
| Maximum per couple (two eligible buyers) | $100,000 |
| Maximum releasable amount | Eligible contributions + associated earnings |
| Number of releases allowed | One (lifetime) |
When you request a release, the maximum you can withdraw comprises your releasable contributions plus an amount of associated earnings calculated by the ATO. Associated earnings are a deemed amount based on the ATO’s shortfall interest charge (SIC) rate — they are not your fund’s actual investment return. The releasable portion depends on the contribution type:
- 100% of eligible non-concessional contributions (after-tax contributions with no deduction claimed).
- 85% of eligible concessional contributions (salary sacrifice and deductible personal contributions) — the 15% reflects contributions tax already paid inside the fund.
Contributing the full $15,000 for three years plus $5,000 in year four gets you to the $50,000 cap. Contributions beyond the limits cannot be included in the release, so track your tally each year.
How an FHSS release is taxed: a worked example
Suppose your marginal tax rate is 32% including Medicare levy, and you salary sacrifice $10,000 in one financial year:
| Step | FHSS (via super) | Ordinary savings account |
|---|---|---|
| Gross amount | $10,000 | $10,000 |
| Tax on the way in | 15% contributions tax = $1,500 | 32% income tax = $3,200 |
| Net available to save | $8,500 | $6,800 |
| Amount releasable under FHSS | 85% of $10,000 = $8,500 (before earnings) | N/A |
| Tax on release | 32% marginal rate less 30% offset = 2% effective | Interest on savings also taxed at 32% |
In this example, FHSS leaves the saver roughly $1,500–$1,700 better off per $10,000 sacrificed, before earnings and fees. The gain is simply paying 15% tax on entry instead of 32%, and an effective 2% (32% minus the 30% offset) on the concessional portion at release.
A few practical tax points:
- The assessable released amount (concessional contributions plus associated earnings) goes on your tax return for the year you requested the release.
- Released non-concessional amounts are not taxed at all on the way out.
- The ATO withholds tax before paying you — at your estimated marginal rate minus the 30% offset (17% if the rate cannot be estimated). The difference is reconciled at tax time.
- Released funds pass through the ATO, which may offset them against outstanding Commonwealth debts (excluding HECS/HELP).
How to apply: the step-by-step process
Every stage of the FHSS process runs through myGov and the ATO’s online services. The order of operations matters — getting it wrong can lock you out of the scheme.
Step 1 — Make your voluntary contributions
Salary sacrifice or make personal contributions to your existing super fund. There is no separate FHSS account; the ATO tracks which contributions are eligible when you apply.
Step 2 — Request an FHSS determination
Through myGov, ask the ATO for an FHSS determination — an official statement of your maximum releasable amount. You must request it before ownership of any property transfers to you. Since 15 September 2024, the determination must be in place before settlement, not before signing the contract — flexibility if you find a property before the paperwork is done.
Step 3 — Request the release
Submit a release request via myGov. The ATO’s service standard is 20 business days, so build this into your purchase timeline. The money passes through the ATO (with tax withheld) and the net amount is paid to you.
Step 4 — Sign a contract within 12 months
From the date of your release request, you have 12 months to sign a contract to purchase or construct a home. The ATO can grant a 12-month extension. After signing, notify the ATO within 90 days.
Step 5 — Move in
It must be your main residence for at least 6 of the first 12 months from when it is practical to occupy.
What happens if you don’t buy a home
If you cannot sign a contract within the allowed period (including the 12-month extension), you have two options:
- Recontribute the released amount back into your super fund, or
- Keep the money and pay FHSS tax of 20% on the released concessional contributions and associated earnings.
This is the scheme’s key risk. The 20% penalty tax can erase much of the tax benefit you gained, so only release the money when you are genuinely ready to buy.
FHSS vs a regular savings account: which is better?
The FHSS scheme does not suit everyone. Its value depends on your tax rate, your timeline, and your discipline.
| Factor | FHSS scheme | High-interest savings account |
|---|---|---|
| Tax on contributions/savings | 15% on concessional contributions | Full marginal rate on the income you save |
| Tax on earnings | Deemed earnings taxed at marginal rate less 30% offset | Interest taxed at full marginal rate |
| Access to your money | Locked in super until release; strict deadlines and penalties | Available any time |
| Contribution caps | $15,000/year FHSS cap; also counts toward super caps | No caps |
| Complexity | Determination, release request, deadlines, tax return reporting | Minimal |
| Best for | Salaried workers on 30%+ marginal rates saving over 2+ years | Short timelines, uncertain plans, or low marginal rates |
The scheme’s advantage grows with your marginal tax rate and your saving horizon. On a $80,000 salary or a $100,000 salary, salary sacrificing the full $15,000 a year produces meaningful savings. On very low incomes, where your marginal rate is already close to 15%, the benefit shrinks. ATO data shows the scheme is well used: over 52,000 determinations and more than $300 million paid to individuals in 2024-25 (ATO usage statistics).
Common FHSS mistakes to avoid
- Counting SG as eligible. Your employer’s compulsory super guarantee contributions can never be released under FHSS — only voluntary contributions count.
- Busting your concessional cap. FHSS contributions share the $32,500 concessional cap with your SG. Excess contributions attract extra tax and cannot be released.
- Bad timing. You need the determination before settlement, and the release takes up to 20 business days — plan both into your purchase.
- Treating deemed earnings as real. Associated earnings use the ATO’s deemed rate, not your fund’s actual performance.
- Owning property first. Request the determination before any property ownership transfers to you — once you own property, eligibility is gone.
- Forgetting the tax return. The assessable released amount must be reported in the return for the year you requested the release.
Frequently Asked Questions
How much can I withdraw under FHSS in 2025-26?
Up to $15,000 of eligible voluntary contributions per financial year and $50,000 lifetime per person, plus associated earnings. You can release 100% of eligible non-concessional contributions and 85% of eligible concessional contributions.
Is an FHSS withdrawal taxed?
Released non-concessional amounts are not taxed. Released concessional contributions and associated earnings are assessable income, taxed at your marginal rate less a 30% offset. The ATO withholds an estimated amount before paying you; the final position is reconciled in your tax return.
Do both partners in a couple each get $50,000?
Yes — eligibility is assessed individually. If both partners meet the criteria, each can release up to $50,000, giving a combined $100,000 toward the same property.
Does FHSS affect eligibility for other first home buyer grants?
No. FHSS is separate from the First Home Guarantee, state first home owner grants, and stamp duty concessions, and does not disqualify you from them.
What happens if I don’t buy a home after releasing my FHSS savings?
You must either recontribute the released amount to super or keep it and pay FHSS tax of 20% on the released concessional contributions and associated earnings. You have 12 months from the release request to sign a contract, with a possible 12-month extension.
Can I mix salary sacrifice and personal contributions?
Yes. Both count, as long as each stays within the $15,000 yearly and $50,000 total FHSS limits and your overall super caps. SG, spouse contributions, and government co-contributions never count.
Start planning your FHSS strategy
The First Home Super Saver scheme is one of the most tax-effective ways to build a home deposit in Australia — a $50,000-per-person release cap, 15% tax on concessional contributions going in, and a 30% offset on the way out. But it rewards planning: contribution caps, timing rules, and the 20% penalty tax for non-purchase mean it pays to model your numbers first. Use our super calculator to project how salary sacrifice grows your balance, check the ATO’s FHSS page for the official rules, and get your determination through myGov before you settle on your first home.