Curious about the First Home Saver Account?

Wednesday September 24, 2008

If you are planning to buy your first house in the next few years, but aren't sure if you'll be able to save enough money for a deposit, the Australian government has designed a new savings account to help first home buyers get a head start. From October 1, the First Home Saver Account will be available to Australians who are planning to buy their first house after four years.

The main features of the First Home Saver Account include:

• Savings are matched by a 17% government contribution on amounts up to $5,000.
• 15% tax on interest or earnings.
• You get interest or earnings on your savings.

The funds you save can only be accessed after four years when you buy your first house or until you turn 65. Additionally, you can save money until you reach the cap of $75,000. After the cap is reached, only earnings/interest and outstanding government contributions may be added to the savings account.

Unlike other savings accounts, you cannot take money out of the First Home Saver Account whenever you want. If you don't use the savings for a house, the money must be transferred to your superannuation fund. You will still be eligible for the First Home Owners Grant.

You are eligible for the First Home Saver Account if:

• You are over 18 years of age and under 65 years of age.
• You have never owned a house that you have lived in.
• You can supply proof of identity and a tax file number.
• Placing money into your savings account can be done:
• At any time.
• After tax income is deducted from your salary.
• You must save at least $1,000 during each financial year.

If you want to open a savings account to get some money started for the First Home Saver Account, you can compare savings accounts now.

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