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SMSF – First Home Super Saver Scheme and Downsizer Contributions Guide – My SMSF


SMSF – First Home Super Saver Scheme and Downsizer Contributions Guide – My SMSF

Many Australians are working towards achieving their dreams of homeownership and securing a comfortable retirement. So, understanding the benefits of superannuation initiatives becomes crucial. The First Home Super Saver Scheme (FHSSS) and Downsizer Contributions stand out as great value strategies, offering both first-time homebuyers and retirees pathways to reach their financial goals. In this article My SMSF, will delve deeper into the specifics of these schemes, highlighting key contribution thresholds, limits, and requirements to help our clients and SMSF members, make informed decisions.

First Home Super Saver Scheme: A Stepping Stone to Homeownership
The FHSSS was designed to assist first-time homebuyers in saving for a deposit by using the low tax Super and SMSF environment to facilitate these savings. FHSSS cleverly combines the tax efficiencies of super and growth potential of superannuation with the most common goal of homeownership.

Key Details and Limits:
• Voluntary Contributions: Eligible individuals can make voluntary contributions to their super, including both concessional (before-tax) and non-concessional (after-tax) contributions. However, these are capped at $15,000 per financial year, with an overall limit of $50,000 across all years.
• Tax Advantages: Concessional contributions are taxed at a reduced rate of 15%, significantly lower than most personal income tax rates. This can increase the amount saved towards your home.
• Withdrawal Conditions: To withdraw for a home deposit, you must have lived in the property for at least six months within the first 12 months of purchase. The amount eligible for withdrawal includes your contributions, minus contributions tax, plus an associated earnings amount calculated by the ATO.
• Age and Residency Requirements: You must be 18 years or older to request a withdrawal and have not previously owned property in Australia. Residency requirements also apply, ensuring the scheme benefits genuine first home buyers.

Downsizer Contributions: Maximizing Your Retirement Nest Egg
For SMSF members, considering downsizing as a strategy in later life, the Downsizer Contributions scheme offers a tax-effective way to boost retirement savings. This initiative allows older Australians to contribute a portion of their home sale proceeds directly into their superannuation.


Key Details and Limits:
• Contribution Cap: Individuals can contribute up to $300,000 from the sale proceeds of their primary residence, with couples able to contribute up to $600,000 collectively. This is in addition to other superannuation contributions available to each member of an SMSF.
• Eligibility Criteria: Available to individuals aged 65 years or older. The property sold must have been owned by you or your spouse for at least 10 years and must qualify as a primary residence for tax purposes.
• No Upper Age or Work Test Limits: Unlike other super contributions, the Downsizer Contributions scheme does not require you to meet an age limit or work test, making it broadly accessible.
• Tax Treatment: Downsizer Contributions are not tax deductible but can be a significant factor in increasing your super balance and are not subject to the usual contributions caps.



Maximum Contribution

Annual Contribution Cap

Tax on Contributions

Eligibility Age

Property Ownership Requirement

Residency Requirement

First Home Super Saver Scheme (FHSSS)

$50,000 (total limit)


Concessional contributions taxed at 15%


Must not have previously owned property in Australia

Yes, must intend to live in the property for at least 6 months within the first 12 months of purchase

Downsizer Contributions

$300,000 per individual or $600,000 per couple




Must have owned the property for at least 10 years


Leveraging These Schemes for Your Financial Benefit
Understanding the thresholds, limits, and requirements of the FHSSS and Downsizer Contributions is key to leveraging these initiatives effectively. For prospective homeowners, the FHSSS provides a tax-efficient strategy to accelerate savings for a home deposit. For retirees or those nearing retirement, the Downsizer Contributions offer a unique opportunity to enhance superannuation savings, potentially improving your lifestyle in retirement.

Charting a Strategic Course to Your Financial Goals
Armed with detailed knowledge of these superannuation strategies, Australians can chart a more informed and strategic course towards homeownership and retirement. The FHSSS and Downsizer Contributions not only reflect the government’s support in achieving these milestones but also highlight the importance of proactive financial planning. By integrating these schemes into your financial journey, you can approach both homeownership and retirement with greater confidence and security, knowing you’ve maximized the benefits available to you.


Always seek tax and legal advice before implementing these complex strategies.