Do the First Home Saver Account eligibility requirements still apply?

Hi Margaret,

I have already met eligibility requirements to buy a property with my First Home Saver Account (FHSA) money.

Do you know whether i still have to meet the 'live in the property for at least six months over the next 12 months' requirements given the 12 months will extend beyond the date that this rule is abolished?

Regards,

FHB

Margaret's answer on the next page. Please click below.

Hi FHB,

The First Home Saver Account (FHSA) was an initiative by the federal government to boost the savings of first home buyers by providing incentives via an additional deposit and tax advantages to this account as long as you placed your own savings in it. 

The rules were simply that you use it only on your first home, do not draw anything out of it for four years, and pay at least $1000 a year into the account over at least four years. In return the government made a 17% contribution on the first $6,000 and only taxed any earnings at 15%. The funds from your first home saver account could only be used to buy a property you intended to live in. The occupancy rule stated that you must live in the home for at least six months and it must be your main residence.

The six-month period must start within:

• 12 months of you becoming the home owner (from settlement date) or;
• 12 months from the day construction was completed if you are building a home

If you failed to use the funds on your first home, it had to be rolled over into superannuation.

However these accounts did not take off as expected and so the following changes will occur:

• Accounts opened after 7:30pm Tuesday 13 May 2014 will not be entitled to the government contribution
• Existing account holders will not be eligible for a government contribution on personal deposits after the 2013-2014 financial year
• Tax and social security concessions will cease 1 July 2015
• Restrictions on withdrawals will be removed on 1 July 2015
• First home saver accounts will be abolished on 1 July 2015

Having said all of that, as of today the accounts are current and this means that the requirements are current.  Since ‘living in the property for six months starting sometime within the first 12 months’ could potentially mean that your six months might feasibly start after the abolition of this rule, one would expect that it would no longer apply at that date. 

However, as you would be accessing the funds during the time that the scheme is still current, you will most likely be required to fulfill your obligations and start living in the property, staying there for the full six months, regardless of when this falls.  The government has provided the benefit and so you should follow the rules relating to that benefit.

If I were you I’d make a call to the Office of State Revenue in your state and clarify their position.  If they do, be sure to get it in writing so that you can prove that this is what you were told, if questioned at a later date.

Regards,

Margaret

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