June 12, 2023 • 15 mins
What is the First Home Super Saver Scheme and how could it help you on your property journey? Zella Director and Mortgage Broker, Cait Bransgrove, is back with Jessica Ricci to give you all of the details, so you can reap the benefits.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The Property Playbook would like to acknowledge the traditional custodians
of the lands of where this podcast is recorded. There
were wondering people of the cooler nations acknowledging the culture,
the history and the connection to the lands of what
we call home. Let's get into it.
Speaker 2 (00:27):
Hello and welcome to the Property Playbook, the podcast where
we take you through the ativ of all things of property.
My name is Jessi Kiriki and one day, hopefully I
will be a first home buyer. But until then I
bring you guys on the journey where I learn all
about all things in the property space. Today I am
joined by Zella Broker, Kate Brandsgrowth. Hello, Hello Jeller broker
(00:49):
and my personal broker. Should I say it feels weird
referring to you like more generally?
Speaker 3 (00:56):
I love that. Hi, thank you for having me. This
is very exciting.
Speaker 2 (00:59):
Thank you for waiting us. For those who don't listen
to shooes on the money, I went through three brokers
before I know, I went through two brokers. You're my third,
not because of my fault. I'm not a nightmare. I
promise you're not. I promise as well. There are you know,
like anything some good ones and some not second ones.
But today I'm really excited to pick your brain because
we're talking about something that we get questions about all
the time, First Home super Safe Scheme, which, if you
(01:23):
don't know, it's a government scheme or incentive that you
can utilize as a first home buyer to help you
along your buying journey. And there are quite a few
schemes that are available, but we're talking about something that's
nationally available, so no matter what state you're in, you
can access this. And I want to talk to you, Kate,
about how and why and the qualifying details, because I
(01:44):
think people get a little bit caught up because when
you look at these things, it can be a little
bit overwhelming because there's technicalities and you know, you have
to do this, but you can't do that, and there
are all these little things that the everyday person like
me probably doesn't know, but a broker should. And that's
why we've got you here today. Let the basics. What
is the scheme?
Speaker 4 (02:01):
Okay, so the First Home super Savior Scheme is essentially
just a scheme where people can make voluntary contributions into
their super where later on, if they're eligible, they can
then withdraw that money to go towards buying their first home.
So as you can imagine, it can be super beneficial.
Speaker 3 (02:17):
But as you said.
Speaker 4 (02:18):
Before, I find a lot of clients where a lot
of people just don't even realize it's a thing, or
because they don't understand the benefits, they just don't really
even look into it to see if it's something they
should set up. The other thing as well that I
see a lot is people don't often think really far ahead.
So you actually also don't have to be eighteen either
to be able to start contributing to the Super Savior scheme,
(02:38):
So a lot of people when they're under eighteen might
not even be thinking about buying.
Speaker 3 (02:42):
Their first home. I wasn't right exactly.
Speaker 4 (02:45):
So a lot of the time, if something seems so
far out, they don't even think to look into it
or contribute to it, or don't even know what it is.
But it could be something that really benefits them when
the time does come.
Speaker 2 (02:56):
And this is one of those things it really pays
to think about it rather than later, in my opinion,
Because the scheme has a cap right, so currently you
can put a maximum of fifty thousand dollars into your
super to withdraw at a later date. But you can
only put fifteen thousand dollars in per financial year, So
if you start thinking about this a year out from
(03:17):
buying your first property, you're only going to be able
to contribute a maximum of thirty thousand dollars depending on
you know, where in the financial year that you are,
which means that's twenty thousand dollars of the scheme that
you're not, you know, making the most.
Speaker 4 (03:28):
Off right exactly, Yeah, And I think once people realize
that as well, and again hence why it's so important
to look ahead because it could benefit you in the
long run if you're actually planning on what you want
to try and do, which isn't always easy because sometimes
people and I also not realize they want to buy
a home. So it's a catch twenty two because I
guess the other main thing to realize is if there
(03:49):
is money in the scheme and you want to use
it for something else, you can't.
Speaker 3 (03:53):
You have to use it to buy a house.
Speaker 2 (03:55):
Yeah, So you can't just put it in and then
take it out to buy a car later for example.
Speaker 4 (03:59):
Exactly has to be has to be for your first home.
Speaker 2 (04:02):
Okay, you said before, it's super beneficial pun not intended,
but very funny. Why would we want to put our
money into super? Why not keep it in your savings
account where it's nice and safe and you can see
it and look at it and admire your hard work
every day.
Speaker 4 (04:16):
Yeah, so that's a really good question. So there's a
few main benefits. The first main benefit is the fact
that if you are making contributions into your super, you're
actually paying less on tax on that money that you
have earned. So, just as an example, again really rough figures,
but let's say you were earning four thousand dollars a
month and you were then salary sacrificing five hundred dollars
(04:38):
of that into your super towards this scheme. That means
you're then only getting taxed on the three thousand, five
hundred dollars at what your tax rate is on the
additional money going into the scheme, your tax on a
much lesser rate, which is fifteen percent.
Speaker 2 (04:53):
So I can still I don't have to talory sacrifice
to I can still just contribute normally.
Speaker 4 (04:57):
Correct, that would be an after tax volunte contribution. If
it is a before tax contribution, it has to be
through your employer, which is then through salary sacrificing with
your employer.
Speaker 2 (05:07):
Yeah, interesting, thoughe It's way easier to make the voluntary
contribution than you think, which is that's what I did
last financially, I maxed out the fifteen thousand, and it
was like transferring a friend. You literally just they give
you a little like BSB in a reference number, You
send the money off and it goes, which is pretty cool.
Speaker 4 (05:24):
So a question that a lot of people ask us
is actually how to set this up.
Speaker 3 (05:27):
So there's two main ways.
Speaker 4 (05:28):
Usually, if you are wanting to do it before tax,
that is where you do set up the salary sacrificing
via your employer. Now it's really important to remember as
well though, to contact your super fund. Just make them
aware of what you're planning on doing and also make
sure that they can release this money at the end.
Apparently the key thing is making sure that your super
fund can actually be a part of it and you
(05:50):
can set it up properly via salary sacrificing. The other way,
like you said, if you are doing it via after
tax contribution, so you've been paid your wage into your
bank account, you can then set it up where you
contact the super fund and it's literally just like a
direct debit where you can pay the money straight into it.
Speaker 2 (06:08):
The fun thing there as well is that if you
do choose to contribute from your post tax income, you
get to claim back at tax time and it's kind
of like free money even though it's not. But because
as you said, it's taxed that fifteen percent within super
and for most people that is lower than your marginal
tax rate. It's a nice little a nice little surprise.
When you follower your tax you're like, whooh, free money.
Speaker 4 (06:31):
It is, And I think it's like a forced savings.
So to go on to the next benefit of doing it,
it's the fact that you're forcing yourself to save this
money and you cannot access it, like we said before,
unless you're going to go buy your first home. So
sometimes clients will say to us that they're so glad
they're putting the money into their super fund. Otherwise, if
they could see it and they could access it, they
probably would have spent it on something random.
Speaker 2 (06:53):
Yeah, it's one of those things, ones that goes in
it doesn't come out, and it's actually not by choice,
that's just the rules. Yeah, you don't and there are
any other benefits that we should know about.
Speaker 4 (07:02):
Yeah, so I guess the other main benefit as well
is that usually the return you have on money that's
sitting in your super would be more than the return
that's sitting in your just your everyday bank account or
your savings account that you might bank with with whoever
you bank with. So the fact that it's sitting in super,
you're obviously getting a return back based on what the
return is like within your super fund.
Speaker 2 (07:21):
Yeah, so important to note, just a reminder that your
superannuation is an investment, which means it is subject to
market volatility.
Speaker 3 (07:29):
Yes, generally speaking, like.
Speaker 2 (07:30):
It's set up to be, I would say, relatively stable
depending on the risk profile that your account is aligned to.
But yeah, keep in mind that it will be subject
to fluctuations. That was a question we had over on
She's on the money. You know, if the entire market
went balley up, could it potentially impact the money you're
taking out? Yes, but generally speaking, I think their geared
(07:50):
to be relatively successful, right. That whole point of your
super is to set you up for the future, so
hopefully those impacts won't be too bad. But it is
something that you do have to keep in mind.
Speaker 3 (08:00):
Definitely spot on.
Speaker 2 (08:01):
All right, let's go to a quick break and when
we come back, Okay, I want to know how do
people figure out whether or not they do qualify? And
you know, are there any important little catches that we
need to be aware of. Stay tuned, we'll be back soon.
Already today we are talking all things first times you
per save a scheme with director and mortgage breaker Kate Brandsgrove. Kate,
you know, it sounds pretty good. I feel like we're
(08:21):
selling people on the concept here, which is not what
we're trying to do, but I mean tax benefits. It
all sounds really appealing. How do we know whether or
not we qualify to use this scheme?
Speaker 4 (08:31):
So you can go on the ATO website and it's
got a lovely section. It's very clear where it summarizes
if you're actually eligible. The key things around the eligibility
criteria is you have to be over eighteen years old.
Reason being is because you also cannot buy a house
unless you're over eighteen years old. The other key thing
is that you cannot have ever had any invested interest
(08:51):
in property within Australia before, so whether that was an
investment property or vacant land or commercial property. It cannot
be any interested any form of property in Australia.
Speaker 2 (09:01):
Because it's meantal we get your foot in the door,
right it's your first first time save the game for
your first property exactly.
Speaker 4 (09:06):
Yes, So once we work out whether you're eligible, which
again the list is on the ATO website and you
can also call them. They're actually super helpful with stuff
like this, like they really break it down and explain
it so you could make sure you can actually do it.
The other key thing to remember here is you have
to apply for a determination prior to signing in any
form of contract of sale. So a determination is basically
(09:28):
just saying how much funds you've got available that you
could release if you were going to. If you sign
a contract prior to getting a determination, you actually then
cannot release the funds.
Speaker 3 (09:38):
Oh yeah, no, no, yes.
Speaker 4 (09:40):
So I've seen sometimes people getting caught out with this
because they're like, oh, I've signed a contract and now
I'm going to go get this. You have to do
it the other way around, otherwise it's your funds are
just stuck in your super fund basically.
Speaker 2 (09:50):
Yeah, okay, And so with this determination is that the
point at which they will say to us, you know,
you put fifty thousand dollars in, but with the market,
you've actually now got fifty one thousand dollars that you
can access based on the returns. Is that correct? Yes?
Speaker 3 (10:05):
Correct? Amazing?
Speaker 2 (10:06):
Hopefully for everybody, it's going to be a high number
than what you put in that a dream. Now, if
you do forget or if you don't do this, is
there any way around it at all? Or is it
just a hard you forget?
Speaker 3 (10:18):
Too bad? So sad? Correct?
Speaker 4 (10:19):
Yeah, you're too bad, so sad. The money's stuck in
your super funds.
Speaker 2 (10:22):
Okay, So everybody, anyone who's planning on making you know,
put it in your calendar, Put it in your diary,
get your friends to remind you, stick it on your wall,
put it somewhere because.
Speaker 3 (10:30):
Stick it on your fridge. Yeah, your head done.
Speaker 2 (10:32):
Tattoo it. You need to remember to fill out that
determination before you sign any contracts when you're setting up
this scheme, do you have to have made a decision
on where you're going to buy or do you need
to have any information at all?
Speaker 4 (10:46):
Not necessarily, however, when you apply for the release of
the fund.
Speaker 3 (10:50):
So a determination.
Speaker 4 (10:51):
Just to clarify, is yes, basically telling you how much
you can take out. You can look into how much
is in your super that you could take out at
any point as well, so don't feel like you can
only apply for a termination once. You can always look
into how much is available. The key thing though, is
that when you apply to them release the funds, you
don't have to release all of them that are in there.
But if you then have only, say, applied to take
(11:12):
out twenty five because you've gone, I don't need all
of it for the property price I'm looking at buying,
and then you go to release the funds and you
change your mind. You can't then just take out the
extra fifty thousand because you've already applied for that release,
so you are stuck. Then with only the twenty five thousand,
you can't go and get any more funds on top
of that after releasing.
Speaker 2 (11:30):
Is there any reason why people would choose to not
take out all of those funds.
Speaker 4 (11:34):
I guess if somebody goes, Okay, we don't need this
much towards the property price we're looking at, We're confident
we're only going to buy for four hundred thousand, So
I need a maxive x amount to take out, and
they go, I reckon, I could get a better return
on my super by leaving it in there because I'm
looking long term towards my retirement. Somebody may go, yep,
that's you know, future caates money that I'll get a
return on based on it being in my super fund. However,
(11:57):
the flip, and this is something we say as brokeers,
is if you're contributing more funds towards your deposit and
the loan amount, now you're bringing your loan balance down,
so you're also paying less money in interest. So what
is a priority to you? Should you just apply to
take the whole amount out? Sure, it can vary based
on each client situation. Ninety nine point nine percent of
(12:17):
the time they'll take out the full amount, the full amount.
Speaker 2 (12:20):
Yeah, okay, And is that something that your broker can
help you kind of determine.
Speaker 4 (12:25):
Yes, Yeah, So they will go through the figures with you,
They'll go through your borrowing capacity, they'll see how much
you've got. Once you get that determination, and then you
work backwards from there to see what funds you need
and what will benefit you the most.
Speaker 3 (12:36):
Yeah, incredible.
Speaker 2 (12:37):
Is there anything else that we really need to know
about utilizing this scheme. Is there any little take home
information that we all need to keep in the back
of our mind.
Speaker 3 (12:45):
Yes.
Speaker 4 (12:45):
Another really important thing is the fact that once you
release the funds.
Speaker 3 (12:50):
You don't have to have a specific property in.
Speaker 4 (12:52):
Mind, but you've got twelve months to use the money
that you have taken out of your super fund.
Speaker 3 (12:58):
They do also give you.
Speaker 4 (12:59):
An automatic twelve months extension on that, which you don't
have to apply for, so really it's twenty four months
from the very start, but they do show it as
if you've got twelve months, So you've got twenty four
months to use the money that you take out.
Speaker 2 (13:11):
So if you don't use your funds within that twenty
four months, what happens.
Speaker 4 (13:14):
So basically, you'll be subject to additional tax that you'll
have to pay on the money that's been released that
you didn't use.
Speaker 2 (13:20):
Speaking of tax, probably should have asked this earlier. Is
it taxed on the way out of super as well?
Speaker 4 (13:25):
Yes, it is, so it's not only taxed on the
way in. So the important point to make is that
it's still taxed at a lower rate than what you
would usually be paying on what you're earning through the
marginal tax rate. So just to clarify with that, you're
getting as well, a thirty percent tax offset on the
amount that you've also withdrawn for the scheme.
Speaker 2 (13:45):
Yeah, amazing, So that would reduce your marginal tax rate,
depending on what you see it, by quite a lot, really,
wouldn't it. Yes, when you apply for the money to
be released, do you get all of what you put
in plus any money that was made with that investment?
Speaker 4 (13:57):
So not necessarily. So if anybody has what's known as
a commonwealth debt, so things like senling, or you have
child support debts or even income tax debts, things like that,
then what actually happens is that gets taken out of
the amount that you've released prior to you receiving the difference.
Speaker 2 (14:13):
So it's kind of like we see that you have money,
and we're going to take what you owe us, yes,
from that money before you two. Kind of sneaky, but it
kind of makes sense as well, it really doesn't that. Yeah,
exactly amazing. That all makes a lot of sense. And
if you are wondering whether you qualify or you want
more information Hedge the Atier website. As Kate said, it
really lays it all out for you, I would say,
pretty clearly, and if you're still not sure, call you
(14:35):
super fun. You're paying fees to them, the least they
can do is kind of walk you through it, explain
it all to you. Or if you're talking to a
mortgage broker, they will also be really well versed and
can kind of take you through this scheme as well
as any other schemes that you might be applicable for.
But I think Kate, that's about it for today. Thank
you so much for joining.
Speaker 3 (14:52):
Me, no worries, Thank you so much for having me.
Speaker 2 (14:54):
And if anyone wants to find you, where can they
book in an appointment with the fabulous Zeala team, So just.
Speaker 3 (14:59):
On the Zellaway site. So go to zella dot com
dot au and we.
Speaker 2 (15:02):
Are there amazing now guys, if you do want to
find a community of like minded people, please check us out.
We're on Facebook and Instagram. You can search at property
playbook aus to find us. If you're liking the content,
a little preview on Apple podcasts. I would love that.
Let me know I'm doing a good job. I would
so appreciate it. But apart from that, thank you so much.
Speaker 3 (15:21):
For tuning in.
Speaker 2 (15:22):
I hope you guys enjoyed and we'll talk to me
in the next episode. Bye.
The Property Playbook would like to acknowledge the traditional custodians
of the lands of where this podcast is recorded. There
were wondering people of the cooler nations acknowledging the culture,
the history and the connection to the lands of what
we call home. Let's get into it.
Speaker 2 (00:27):
Hello and welcome to the Property Playbook, the podcast where
we take you through the ativ of all things of property.
My name is Jessi Kiriki and one day, hopefully I
will be a first home buyer. But until then I
bring you guys on the journey where I learn all
about all things in the property space. Today I am
joined by Zella Broker, Kate Brandsgrowth. Hello, Hello Jeller broker
(00:49):
and my personal broker. Should I say it feels weird
referring to you like more generally?
Speaker 3 (00:56):
I love that. Hi, thank you for having me. This
is very exciting.
Speaker 2 (00:59):
Thank you for waiting us. For those who don't listen
to shooes on the money, I went through three brokers
before I know, I went through two brokers. You're my third,
not because of my fault. I'm not a nightmare. I
promise you're not. I promise as well. There are you know,
like anything some good ones and some not second ones.
But today I'm really excited to pick your brain because
we're talking about something that we get questions about all
the time, First Home super Safe Scheme, which, if you
(01:23):
don't know, it's a government scheme or incentive that you
can utilize as a first home buyer to help you
along your buying journey. And there are quite a few
schemes that are available, but we're talking about something that's
nationally available, so no matter what state you're in, you
can access this. And I want to talk to you, Kate,
about how and why and the qualifying details, because I
(01:44):
think people get a little bit caught up because when
you look at these things, it can be a little
bit overwhelming because there's technicalities and you know, you have
to do this, but you can't do that, and there
are all these little things that the everyday person like
me probably doesn't know, but a broker should. And that's
why we've got you here today. Let the basics. What
is the scheme?
Speaker 4 (02:01):
Okay, so the First Home super Savior Scheme is essentially
just a scheme where people can make voluntary contributions into
their super where later on, if they're eligible, they can
then withdraw that money to go towards buying their first home.
So as you can imagine, it can be super beneficial.
Speaker 3 (02:17):
But as you said.
Speaker 4 (02:18):
Before, I find a lot of clients where a lot
of people just don't even realize it's a thing, or
because they don't understand the benefits, they just don't really
even look into it to see if it's something they
should set up. The other thing as well that I
see a lot is people don't often think really far ahead.
So you actually also don't have to be eighteen either
to be able to start contributing to the Super Savior scheme,
(02:38):
So a lot of people when they're under eighteen might
not even be thinking about buying.
Speaker 3 (02:42):
Their first home. I wasn't right exactly.
Speaker 4 (02:45):
So a lot of the time, if something seems so
far out, they don't even think to look into it
or contribute to it, or don't even know what it is.
But it could be something that really benefits them when
the time does come.
Speaker 2 (02:56):
And this is one of those things it really pays
to think about it rather than later, in my opinion,
Because the scheme has a cap right, so currently you
can put a maximum of fifty thousand dollars into your
super to withdraw at a later date. But you can
only put fifteen thousand dollars in per financial year, So
if you start thinking about this a year out from
(03:17):
buying your first property, you're only going to be able
to contribute a maximum of thirty thousand dollars depending on
you know, where in the financial year that you are,
which means that's twenty thousand dollars of the scheme that
you're not, you know, making the most.
Speaker 4 (03:28):
Off right exactly, Yeah, And I think once people realize
that as well, and again hence why it's so important
to look ahead because it could benefit you in the
long run if you're actually planning on what you want
to try and do, which isn't always easy because sometimes
people and I also not realize they want to buy
a home. So it's a catch twenty two because I
guess the other main thing to realize is if there
(03:49):
is money in the scheme and you want to use
it for something else, you can't.
Speaker 3 (03:53):
You have to use it to buy a house.
Speaker 2 (03:55):
Yeah, So you can't just put it in and then
take it out to buy a car later for example.
Speaker 4 (03:59):
Exactly has to be has to be for your first home.
Speaker 2 (04:02):
Okay, you said before, it's super beneficial pun not intended,
but very funny. Why would we want to put our
money into super? Why not keep it in your savings
account where it's nice and safe and you can see
it and look at it and admire your hard work
every day.
Speaker 4 (04:16):
Yeah, so that's a really good question. So there's a
few main benefits. The first main benefit is the fact
that if you are making contributions into your super, you're
actually paying less on tax on that money that you
have earned. So, just as an example, again really rough figures,
but let's say you were earning four thousand dollars a
month and you were then salary sacrificing five hundred dollars
(04:38):
of that into your super towards this scheme. That means
you're then only getting taxed on the three thousand, five
hundred dollars at what your tax rate is on the
additional money going into the scheme, your tax on a
much lesser rate, which is fifteen percent.
Speaker 2 (04:53):
So I can still I don't have to talory sacrifice
to I can still just contribute normally.
Speaker 4 (04:57):
Correct, that would be an after tax volunte contribution. If
it is a before tax contribution, it has to be
through your employer, which is then through salary sacrificing with
your employer.
Speaker 2 (05:07):
Yeah, interesting, thoughe It's way easier to make the voluntary
contribution than you think, which is that's what I did
last financially, I maxed out the fifteen thousand, and it
was like transferring a friend. You literally just they give
you a little like BSB in a reference number, You
send the money off and it goes, which is pretty cool.
Speaker 4 (05:24):
So a question that a lot of people ask us
is actually how to set this up.
Speaker 3 (05:27):
So there's two main ways.
Speaker 4 (05:28):
Usually, if you are wanting to do it before tax,
that is where you do set up the salary sacrificing
via your employer. Now it's really important to remember as
well though, to contact your super fund. Just make them
aware of what you're planning on doing and also make
sure that they can release this money at the end.
Apparently the key thing is making sure that your super
fund can actually be a part of it and you
(05:50):
can set it up properly via salary sacrificing. The other way,
like you said, if you are doing it via after
tax contribution, so you've been paid your wage into your
bank account, you can then set it up where you
contact the super fund and it's literally just like a
direct debit where you can pay the money straight into it.
Speaker 2 (06:08):
The fun thing there as well is that if you
do choose to contribute from your post tax income, you
get to claim back at tax time and it's kind
of like free money even though it's not. But because
as you said, it's taxed that fifteen percent within super
and for most people that is lower than your marginal
tax rate. It's a nice little a nice little surprise.
When you follower your tax you're like, whooh, free money.
Speaker 4 (06:31):
It is, And I think it's like a forced savings.
So to go on to the next benefit of doing it,
it's the fact that you're forcing yourself to save this
money and you cannot access it, like we said before,
unless you're going to go buy your first home. So
sometimes clients will say to us that they're so glad
they're putting the money into their super fund. Otherwise, if
they could see it and they could access it, they
probably would have spent it on something random.
Speaker 2 (06:53):
Yeah, it's one of those things, ones that goes in
it doesn't come out, and it's actually not by choice,
that's just the rules. Yeah, you don't and there are
any other benefits that we should know about.
Speaker 4 (07:02):
Yeah, so I guess the other main benefit as well
is that usually the return you have on money that's
sitting in your super would be more than the return
that's sitting in your just your everyday bank account or
your savings account that you might bank with with whoever
you bank with. So the fact that it's sitting in super,
you're obviously getting a return back based on what the
return is like within your super fund.
Speaker 2 (07:21):
Yeah, so important to note, just a reminder that your
superannuation is an investment, which means it is subject to
market volatility.
Speaker 3 (07:29):
Yes, generally speaking, like.
Speaker 2 (07:30):
It's set up to be, I would say, relatively stable
depending on the risk profile that your account is aligned to.
But yeah, keep in mind that it will be subject
to fluctuations. That was a question we had over on
She's on the money. You know, if the entire market
went balley up, could it potentially impact the money you're
taking out? Yes, but generally speaking, I think their geared
(07:50):
to be relatively successful, right. That whole point of your
super is to set you up for the future, so
hopefully those impacts won't be too bad. But it is
something that you do have to keep in mind.
Speaker 3 (08:00):
Definitely spot on.
Speaker 2 (08:01):
All right, let's go to a quick break and when
we come back, Okay, I want to know how do
people figure out whether or not they do qualify? And
you know, are there any important little catches that we
need to be aware of. Stay tuned, we'll be back soon.
Already today we are talking all things first times you
per save a scheme with director and mortgage breaker Kate Brandsgrove. Kate,
you know, it sounds pretty good. I feel like we're
(08:21):
selling people on the concept here, which is not what
we're trying to do, but I mean tax benefits. It
all sounds really appealing. How do we know whether or
not we qualify to use this scheme?
Speaker 4 (08:31):
So you can go on the ATO website and it's
got a lovely section. It's very clear where it summarizes
if you're actually eligible. The key things around the eligibility
criteria is you have to be over eighteen years old.
Reason being is because you also cannot buy a house
unless you're over eighteen years old. The other key thing
is that you cannot have ever had any invested interest
(08:51):
in property within Australia before, so whether that was an
investment property or vacant land or commercial property. It cannot
be any interested any form of property in Australia.
Speaker 2 (09:01):
Because it's meantal we get your foot in the door,
right it's your first first time save the game for
your first property exactly.
Speaker 4 (09:06):
Yes, So once we work out whether you're eligible, which
again the list is on the ATO website and you
can also call them. They're actually super helpful with stuff
like this, like they really break it down and explain
it so you could make sure you can actually do it.
The other key thing to remember here is you have
to apply for a determination prior to signing in any
form of contract of sale. So a determination is basically
(09:28):
just saying how much funds you've got available that you
could release if you were going to. If you sign
a contract prior to getting a determination, you actually then
cannot release the funds.
Speaker 3 (09:38):
Oh yeah, no, no, yes.
Speaker 4 (09:40):
So I've seen sometimes people getting caught out with this
because they're like, oh, I've signed a contract and now
I'm going to go get this. You have to do
it the other way around, otherwise it's your funds are
just stuck in your super fund basically.
Speaker 2 (09:50):
Yeah, okay, And so with this determination is that the
point at which they will say to us, you know,
you put fifty thousand dollars in, but with the market,
you've actually now got fifty one thousand dollars that you
can access based on the returns. Is that correct? Yes?
Speaker 3 (10:05):
Correct? Amazing?
Speaker 2 (10:06):
Hopefully for everybody, it's going to be a high number
than what you put in that a dream. Now, if
you do forget or if you don't do this, is
there any way around it at all? Or is it
just a hard you forget?
Speaker 3 (10:18):
Too bad? So sad? Correct?
Speaker 4 (10:19):
Yeah, you're too bad, so sad. The money's stuck in
your super funds.
Speaker 2 (10:22):
Okay, So everybody, anyone who's planning on making you know,
put it in your calendar, Put it in your diary,
get your friends to remind you, stick it on your wall,
put it somewhere because.
Speaker 3 (10:30):
Stick it on your fridge. Yeah, your head done.
Speaker 2 (10:32):
Tattoo it. You need to remember to fill out that
determination before you sign any contracts when you're setting up
this scheme, do you have to have made a decision
on where you're going to buy or do you need
to have any information at all?
Speaker 4 (10:46):
Not necessarily, however, when you apply for the release of
the fund.
Speaker 3 (10:50):
So a determination.
Speaker 4 (10:51):
Just to clarify, is yes, basically telling you how much
you can take out. You can look into how much
is in your super that you could take out at
any point as well, so don't feel like you can
only apply for a termination once. You can always look
into how much is available. The key thing though, is
that when you apply to them release the funds, you
don't have to release all of them that are in there.
But if you then have only, say, applied to take
(11:12):
out twenty five because you've gone, I don't need all
of it for the property price I'm looking at buying,
and then you go to release the funds and you
change your mind. You can't then just take out the
extra fifty thousand because you've already applied for that release,
so you are stuck. Then with only the twenty five thousand,
you can't go and get any more funds on top
of that after releasing.
Speaker 2 (11:30):
Is there any reason why people would choose to not
take out all of those funds.
Speaker 4 (11:34):
I guess if somebody goes, Okay, we don't need this
much towards the property price we're looking at, We're confident
we're only going to buy for four hundred thousand, So
I need a maxive x amount to take out, and
they go, I reckon, I could get a better return
on my super by leaving it in there because I'm
looking long term towards my retirement. Somebody may go, yep,
that's you know, future caates money that I'll get a
return on based on it being in my super fund. However,
(11:57):
the flip, and this is something we say as brokeers,
is if you're contributing more funds towards your deposit and
the loan amount, now you're bringing your loan balance down,
so you're also paying less money in interest. So what
is a priority to you? Should you just apply to
take the whole amount out? Sure, it can vary based
on each client situation. Ninety nine point nine percent of
(12:17):
the time they'll take out the full amount, the full amount.
Speaker 2 (12:20):
Yeah, okay, And is that something that your broker can
help you kind of determine.
Speaker 4 (12:25):
Yes, Yeah, So they will go through the figures with you,
They'll go through your borrowing capacity, they'll see how much
you've got. Once you get that determination, and then you
work backwards from there to see what funds you need
and what will benefit you the most.
Speaker 3 (12:36):
Yeah, incredible.
Speaker 2 (12:37):
Is there anything else that we really need to know
about utilizing this scheme. Is there any little take home
information that we all need to keep in the back
of our mind.
Speaker 3 (12:45):
Yes.
Speaker 4 (12:45):
Another really important thing is the fact that once you
release the funds.
Speaker 3 (12:50):
You don't have to have a specific property in.
Speaker 4 (12:52):
Mind, but you've got twelve months to use the money
that you have taken out of your super fund.
Speaker 3 (12:58):
They do also give you.
Speaker 4 (12:59):
An automatic twelve months extension on that, which you don't
have to apply for, so really it's twenty four months
from the very start, but they do show it as
if you've got twelve months, So you've got twenty four
months to use the money that you take out.
Speaker 2 (13:11):
So if you don't use your funds within that twenty
four months, what happens.
Speaker 4 (13:14):
So basically, you'll be subject to additional tax that you'll
have to pay on the money that's been released that
you didn't use.
Speaker 2 (13:20):
Speaking of tax, probably should have asked this earlier. Is
it taxed on the way out of super as well?
Speaker 4 (13:25):
Yes, it is, so it's not only taxed on the
way in. So the important point to make is that
it's still taxed at a lower rate than what you
would usually be paying on what you're earning through the
marginal tax rate. So just to clarify with that, you're
getting as well, a thirty percent tax offset on the
amount that you've also withdrawn for the scheme.
Speaker 2 (13:45):
Yeah, amazing, So that would reduce your marginal tax rate,
depending on what you see it, by quite a lot, really,
wouldn't it. Yes, when you apply for the money to
be released, do you get all of what you put
in plus any money that was made with that investment?
Speaker 4 (13:57):
So not necessarily. So if anybody has what's known as
a commonwealth debt, so things like senling, or you have
child support debts or even income tax debts, things like that,
then what actually happens is that gets taken out of
the amount that you've released prior to you receiving the difference.
Speaker 2 (14:13):
So it's kind of like we see that you have money,
and we're going to take what you owe us, yes,
from that money before you two. Kind of sneaky, but it
kind of makes sense as well, it really doesn't that. Yeah,
exactly amazing. That all makes a lot of sense. And
if you are wondering whether you qualify or you want
more information Hedge the Atier website. As Kate said, it
really lays it all out for you, I would say,
pretty clearly, and if you're still not sure, call you
(14:35):
super fun. You're paying fees to them, the least they
can do is kind of walk you through it, explain
it all to you. Or if you're talking to a
mortgage broker, they will also be really well versed and
can kind of take you through this scheme as well
as any other schemes that you might be applicable for.
But I think Kate, that's about it for today. Thank
you so much for joining.
Speaker 3 (14:52):
Me, no worries, Thank you so much for having me.
Speaker 2 (14:54):
And if anyone wants to find you, where can they
book in an appointment with the fabulous Zeala team, So just.
Speaker 3 (14:59):
On the Zellaway site. So go to zella dot com
dot au and we.
Speaker 2 (15:02):
Are there amazing now guys, if you do want to
find a community of like minded people, please check us out.
We're on Facebook and Instagram. You can search at property
playbook aus to find us. If you're liking the content,
a little preview on Apple podcasts. I would love that.
Let me know I'm doing a good job. I would
so appreciate it. But apart from that, thank you so much.
Speaker 3 (15:21):
For tuning in.
Speaker 2 (15:22):
I hope you guys enjoyed and we'll talk to me
in the next episode. Bye.
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