The First Home Super Saver (FHSS) scheme is a powerful savings tool, but it has specific rules that can trip you up. Here are the most common mistakes — and how to avoid them.
Mistake 1: Signing a Contract Before Requesting a Determination
The rule: You must request an FHSS determination from the ATO before signing a contract to purchase a property. Once you sign, you then have 14 days to apply for the determination (some flexibility exists, but this creates unnecessary risk).
Why it matters: If you sign first and then apply, the ATO may determine that the timing doesn’t comply. Always get your determination first.
The fix: Apply for the determination as soon as you are actively searching for a property and ready to make offers.
Mistake 2: Expecting Funds Immediately
The rule: After applying for FHSS release, funds take 15–25 business days to arrive in your bank account.
Why it matters: If your settlement is in 21 days, FHSS funds may not arrive in time. Many buyers are surprised by this delay.
The fix: Plan for settlement at least 6–8 weeks after applying for release. Negotiate a longer settlement period when making an offer.
Mistake 3: Not Notifying Your Fund About FHSS
While you don’t need to tell your fund when making contributions, you should understand that contributions sit in your regular super account — not a separate FHSS account. Don’t withdraw or roll over your super while FHSS contributions are unresolved.
The fix: Avoid switching funds or making rollovers while waiting for an FHSS determination — this can complicate the process.
Mistake 4: Assuming Non-Concessional Contributions Have the Same Tax Benefit
Concessional (salary sacrifice or personal deductible) FHSS contributions get a tax benefit on the way in. Non-concessional contributions (after-tax) do not get a contribution tax benefit — but they are withdrawn tax-free (the non-concessional component).
Why it matters: Many people assume all FHSS contributions work the same way for tax. If you are already at your marginal rate, using salary sacrifice (concessional) provides a far better tax outcome.
The fix: Default to salary sacrifice or personal deductible contributions for FHSS unless you have already maxed your concessional cap.
Mistake 5: Contributing Too Much in One Year
You can only count $15,000 per year toward FHSS. Contributing more than $15,000 in voluntary contributions in a year doesn’t increase your FHSS limit — the excess simply sits in super as normal super money.
The fix: Track your FHSS contributions each year. Use the myGov ATO portal to check your FHSS total.
Mistake 6: Forgetting to Include FHSS in Your Tax Return
FHSS release amounts must be included in your income tax return for the year you receive them. The ATO will send you a payment summary showing the taxable FHSS component. Forgetting to include it can result in a tax shortfall.
The fix: Keep your FHSS determination and payment summary documents for your tax agent.
Mistake 7: Assuming FHSS Works for Investment Properties
FHSS is for properties you intend to live in. If you use the released funds for an investment property, or don’t move in within 6 months of settlement, you may be subject to the FHSS tax (marginal rate + 20% on the amount).
The fix: Only use FHSS for your principal place of residence.
Mistake 8: Not Recontributing When Plans Change
If you apply for a release but don’t end up buying a home, you can recontribute the amount to your super as a non-concessional contribution within 12 months to avoid the FHSS tax. Many people miss this window.
The fix: Act promptly if plans change — the 12-month window closes faster than expected.
For more: FHSS How to Apply, FHSS Eligibility, FHSS Tax Treatment, FHSS FAQ. For advice tailored to your situation, speak with a licensed financial adviser via MoneySmart.