Due to the increasing recession and other financial problems, it has become quite difficult for people to invest huge amount to purchase their first home. In order to help such people, the government has taken effective steps to fulfill their dreams of owning a house of their own.
The federal government has lately launched The First Home Saver Account, also known as FHSA, to help all those people who are looking for their first homes. It has also provided some contributions to FHSA and the interest that accumulates on this account is normally taxed at lower rates. It is a great opportunity for people who want to buy their home for the first time where the buyer has to save deposit by this effective and tax saving account. Thus, FHSA has proved to be quite beneficial for first home buyers. This program was launched in the year 2007 by Prime Minister Rudd as a simple tax saving program. It offers governmental assistance to support people to start saving for their first homes in Australia.
If you want to live in Australia and have saved a good amount of money to purchase a house for the first time to reside there and also you are capable to save around $1000 yearly, then you can enjoy the benefits of FHSA program. You can not withdraw till you have made a minimum contribution of $1000 yearly. You can withdraw the entire amount to purchase your first home in Australia. You can avail tax exemption by doing so. You need to be above 18 years of age or below 65 years of age to be eligible for this program. Moreover, you need to submit your tax file number too. Further, if you want to avail FHSA program, you should never have applied for it before this. And this is for your first home in Australia. Also, you don’t have to have any other savings along with this or else, you have to open a new and your personal FHSA.
To fast track your savings the first home saver account is perfect. You can instantly deposit your money and you are obliged to keep the savings in your account for minimum 4 years. The minimum balance thats need to be maintained is cap of $75,000. Until you reach this amount, you should save and invest your money in your account. The government will then chip in with their contribution once your account reached the required balance.
Early withdrawal from your account is prohibited. If you make an early withdrawal your account is effectively closed. The FHSA account holder enjoys tax benefit and with each $5000 index amount you save, the government contributes 17%. Also, the income tax is normally charged higher than 15%, however for FHSA earnings, the tax rate is of 15% only. Also, the asset tests for this account is not required. The account is closed when a home is purhcased or when you reach 65 years of age.