First Home Saver Accounts - rule changes get green light
Tuesday, 10 May 2011
Changes to First Home Saver Account scheme allowing early purchase finally clear Parliament, bill awaits royal assent to come into effect.
Legislation to improve the flexibility of the First Home Saver Account scheme has passed both houses, exactly a year after being announced in the 2010 budget.
The rule changes will enable money in a First Home Saver Account to be paid into an account holder’s mortgage, if they buy a first home earlier than existing rules allow. While the funds will not be immediately available for use towards a deposit, the account can remain open (with no further contributions allowed) and after meeting the 4 year minimum qualifying period the money will be available to pay down the first home buyer’s mortgage.
Under the original rules, early purchasers would see their FHSA balance forced into superannuation.
First Home Saver Account rule changes - key points:
- Early first home purchasers no longer penalised due to changing circumstances,
- Savings in a FHSA can be paid into a mortgage rather than forced into superannuation,
- Money must still be held in the FHSA until the end of the minimum qualifying period (usually four years),
- No further personal contributions can be made into a FHSA once a home is purchased,
- New rules are not retrospective, and only apply to houses purchased after the new legislation receives royal assent (date TBC – expected within the next month).
This change improves the flexibility of the First Home Saver Account scheme, and is a welcome recognition from the Government that first home buyers want to be able to make purchasing decisions appropriate to their changing circumstances.
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