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First Home Savers Account

Discussion in 'Real Estate' started by archangelsupreme, 13th May, 2008.

  1. archangelsupreme

    archangelsupreme Well-Known Member

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    Location:
    Australia
    The government is contributing 17% for the first $5000 you put into the savings account.

    Just wondering if this savings account only applies to those who have no properties under their name.

    i.e. What if you already have an investment property....would it still be possible to put money into this account if you next property purchase is going to be PPOR?

    I says that you don't get taxed if you withdraw the money for purchasing or renovating a first home.....what if you withdraw for some other purpose such as to fund an investment property? Will the tax savings be mitigated if you do this..
     
  2. AsxBroker

    AsxBroker Well-Known Member

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    Hi ArchAngelSupreme,

    This is for people who are eligible for FHOG...

    Home Saver Accounts - Fact Sheet

    "Eligibility
    An individual can open an account if they:
    are aged 18 or over and under 65;
    have not previously purchased or built a first home in which to live;
    do not have, or have not previously had, a First Home Saver Account; and
    provide their tax file number to the provider.
    Penalties will apply if a person opens an account where they are not eligible to do so."

    Cheers,

    Dan

    PS FHSAs are conceptual at the moment as there are no providers yet, they are expected to start from 1st October 2008.
     
  3. archangelsupreme

    archangelsupreme Well-Known Member

    Joined:
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    Location:
    Australia

    So you basically can put your money in there even if you have an investment property but have not purchased a main residence (i.e. PPOR) with which to live in.

    Hope they bring this out soon....i wouldn't mind salary sacrificing into this...
     
  4. AsxBroker

    AsxBroker Well-Known Member

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    Hi ArchAngelSupreme,

    Just double check that you are eligible for the First Home Owners Grant (FHOG). You can check here (First Home Owners Scheme)

    Also this is AFTER TAX money, not pre-tax/salary sacrificing.
    If your on the 30% tax bracket you get a 17% in additional contributions from the government.

    Cheers,

    Dan

    PS Before making an investment decision you should speak to your FPA registered Financial Planner.
     
  5. bella

    bella Well-Known Member

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    Location:
    QLD
    Actually the criteria are not exactly the same as the first home owner grant, it is possible to be eligible for this savings account yet not be eligible for the grant.

    The grant is different in each state, this savings account as a federal initiative is uniform.

    Best to check from the horses mouth: http://homesaver.treasury.gov.au/

    The main difference that stands out to me as far as eligibility is concerned is that the savings account is based on the individual - your partner's status has no bearing on your eligibility, whereas with the FHOG it does make a difference.

    It doesn't matter what your tax bracket is, you will get a 17% co-contribution to your contributions up to $5000 a year.

    I did some number crunching to compare it to salary sacrificing into super or to after tax investments*;
    For $100 of pre-tax salary:
    Salary sacrifice into super: $85.00 gets into super
    Deposit $100 gross into home saver: $80.15 gets into home saver account
    Put $100 gross into after tax investment: $68.50 gets into after-tax investment
    (*assume 15% contribution tax into super, and 17% co-contribution, 31.5 tax rate (ok 30% rate + medicare tax, oops i mean levy...);
    )

    So yeah it's better than after tax investing but not quite as good as salary sacrifice. If you are on a lower tax bracket it looks better than in the example i gave.

    BTW I think I saw on the site the accounts should be out around October this year.
     
  6. AsxBroker

    AsxBroker Well-Known Member

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    So if you own a swag of investment properties and have a landlord where you live you could start a FHSA (well after 1st October 2008 when product providers have an FHSA to put money into).

    Certainly no product providers have jumped into the deep end, maybe they don't see much money in it as the balance is capped at $75,000 (in the first year).

    It'll be interesting to see who is first to market with the FHSA.

    Cheers,

    Dan

    PS Speak to your FPA registered Financial Planner before making an investment decision.
     
  7. bella

    bella Well-Known Member

    Joined:
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    Well in Queensland at least you can own a swag of investment properties and claim both FHSA and FHBG providing you held no interest in the properties before some date (July 2000 i think), and never lived in any of the properties you had interest in (and met the other criteria as well).

    I think many people may not realise they would be eligible for this savings account.

    I think it is a bit early for product providers to be offering anything, there is probably more that needs doing on part of the government first.