First home saver account changes

[schnootle]

Some here may have noticed that back in October the government finally proposed some sensible changes to the first home saving accounts, basically making them not completely useless. The changes are basically that if you buy a house in less than 4 years you can keep the account and roll it into your mortgage when the 4 years is up, rather than being forced into you super.

http://www.firsthomesaver.com.au/

Does anyone know any more about this, has it gone to where draft legislation goes to die?, or is it just taking long time? Because it will finally be a useful account for some of us here.

 

[ck13488]

First Home Saver Account rule changes are now active, allowing early purchasers to use the savings in their account towards their mortgage (after meeting the 4 years) rather than losing their first home savings to super.

This effectively means a FHSA holder can pay a deposit on their first home before meeting the four year rule, and have until settlement date to make further account contributions to maximise their account benefits. Once settlement takes place, no further contributions can be made but the four year rule must be met before their savings can be released and go towards their mortgage.

First Home Saver Accounts - new rules now active

Does anyone know if the balance of this account would offset the amount needed to be borrowed in order to purchase a home? Or will it not count as an asset/deposit and simply act as a lump sum repayment once the 4 year rule has been met?

The four year rule can be taken advantage of as shown below:
Fin year 1: 30 June 2011 $5500 deposit ($935 gov't co-cont.)
Fin year 2: 1 July 2011 $5500 deposit ($935 gov't co-cont.)
Fin year 3: 1 July 2012 $5500 deposit ($935 gov't co-cont.)
Fin year 4: 1 July 2013 $5500 deposit ($935 gov't co-cont.)

Withdraw on 2 July 2013 - only 2 years and 2 days after initial deposit.

Currently most accounts offer 5.25% p.a. although taxed at 15%

I'm planning on going to CBA/ANZ once uni exams are out of the way, although I've heard the banks aren't 100% on the details of these accounts. Id like to find out ASAP as a $5,500 deposit made before 30 June will count as a 1 of the 4 qualifying years and also receive the full 17% ($935) co-contribution.

If you build or buy your home before meeting the four-year rule, you must let your account provider know within 30 days whether you want to have the balance of the account paid to you for your mortgage at the end of your minimum qualifying period or paid to your superannuation.

ATO - Guide to first home saver accounts

This is great outcome for first home buyers, this adds so much flexibility. If you find a home before the four statutory years is up you can buy it.

Relaxed rules for first home saver accounts

 

[schnootle]

Excellent, thanks ck. I think I will open one before then end of the month, I think its worth the free money. The rules are still a bit crazy though, a lot of people if they buy before 4 years will want to use the money as a deposit to get a loan from a bank, that being the main point. I doubt banks will let you use it as a deposit if you can't access it for another year. It works for us because we have enough for a deposit in another account and will just treat this as extra.

 

[ck13488]

Can anyone tell me when the gov't contribution is paid?

My guess is sometime after 31/10 for 2011 FY co-contributions??? (i.e. once ITR's are due)

The bank is hopeless when it comes to FHSA's

 

[Huskar]

The Tax Office pays the contribution when you get your tax return. If this did not happen then the ATO may not be happy that you have met all the requirements and you need to contact them. See http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00250962.htm&page=12&H12

A continual advocate for the benefits of the FHSL is Barefoot investor and they often tell you which bank is giving the best rates etc. http://www.barefootinvestor.com/top-first-home-saver-accounts/

 

[ck13488]

The Tax Office pays the contribution when you get your tax return. If this did not happen then the ATO may not be happy that you have met all the requirements and you need to contact them. See http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00250962.htm&page=12&H12

A continual advocate for the benefits of the FHSL is Barefoot investor and they often tell you which bank is giving the best rates etc. http://www.barefootinvestor.com/top-first-home-saver-accounts/

After contacting the ATO today it turns out banks have till 31/10 to notify the ATO of contributions made to FHSAs.

The CBA have not yet provided this info. I also know from work they were tardy in getting interest details to the ATO. Only with CBA as it was the only bank i could get to during a lunch break to open an account. Will be changing to ME bank once the co-cont. is received for that extra .25