Last updated: July 2026
FHSS vs Saving Outside Super: Which Is Better for Your Deposit?
The First Home Super Saver Scheme (FHSS) lets you salary sacrifice into super and withdraw it later for a home deposit, paying just 15% contributions tax instead of your marginal rate. But it adds complexity and locks your money away. Here is a direct comparison so you can decide whether the tax saving is worth it.
Side-by-Side Comparison
| Feature | FHSS (Super) | Regular Savings |
|---|---|---|
| Tax on contributions | 15% (super contributions tax) | Your marginal tax rate (up to 47%) |
| Access to funds | Apply to ATO, 15-20 business days | Immediate |
| Maximum amount | $50,000 per person (lifetime) | No limit |
| Earnings rate | Deemed at SIC rate (~7%) | Actual bank rate (~4-5%) |
| Flexibility | Locked until ATO release | Fully flexible, withdraw any time |
| Complexity | ATO application process required | Simple bank account |
| Tax on withdrawal | Marginal rate minus 30% offset | None (already taxed) |
The Tax Saving at Every Income Level
The FHSS benefit comes from the gap between your marginal tax rate (including Medicare levy) and the 15% super contributions tax. The wider the gap, the bigger the saving.
| Income | Marginal + Medicare | Super Tax | Saving per $1 | Saving on $45k |
|---|---|---|---|---|
| $30,000 | 15% + 2% = 17% | 15% | $0.02 | $900 |
| $60,000 | 30% + 2% = 32% | 15% | $0.17 | $7,650 |
| $90,000 | 30% + 2% = 32% | 15% | $0.17 | $7,650 |
| $120,000 | 30% + 2% = 32% | 15% | $0.17 | $7,650 |
| $150,000 | 37% + 2% = 39% | 15% | $0.24 | $10,800 |
| $200,000 | 45% + 2% = 47% | 15% | $0.32 | $14,400 |
The "Saving on $45k" column shows the total tax difference if you contribute the maximum $15,000 per year for three years ($45,000 total) through FHSS versus saving the same amount from after-tax income. Based on 2026-27 ATO tax rates.
When FHSS Wins
- You earn above $45,000 (where the 30% marginal rate kicks in, creating a meaningful tax gap)
- You can commit to buying within the FHSS timeframe (12 months after release to sign a contract)
- You have 12 or more months before your planned purchase (time to contribute and process the release)
- You are disciplined with savings (money in super is harder to dip into than a bank account)
When Regular Savings Wins
- You need flexibility and might not end up buying (no 20% penalty tax if plans change)
- You earn under $45,000 (the tax gap is only 2%, barely worth the complexity)
- You want to buy very soon (FHSS release takes 15-20 business days through the ATO)
- You need more than $50,000 saved per person (FHSS has a lifetime cap)
Worked Example
A single person earning $90,000, saving $15,000 per year for 3 years:
Using FHSS
- Contributed: $45,000 over 3 years
- Super contributions tax (15%): $6,750
- After-tax in super: $38,250
- Deemed earnings (SIC ~7%): added to release
- 85% concessional release rate applies
- Estimated total release: ~$42,500
Saving Outside Super
- Gross income needed: $45,000
- Tax at 32% marginal + Medicare: $14,400
- After-tax savings: $30,600
- Bank interest (~4.5%): modest return
- Fully accessible at any time
- No ATO processing required
In this scenario, FHSS provides approximately $11,900 more in your deposit compared to saving the same gross amount outside super. The exact figure depends on the SIC deemed rate and your withdrawal timing. Use our calculator to model your specific situation.
Can You Do Both?
Yes, and many buyers do. The FHSS cap is $15,000 per financial year ($50,000 lifetime), so you can salary sacrifice up to the cap into super and save additional money in a regular bank account alongside it. This gives you the tax benefit on the first $15,000 per year while keeping the rest of your savings fully accessible.
This combined approach is especially useful if you need a larger deposit. For example, a 5% deposit on a $700,000 property is $35,000. You could build $25,000 through FHSS over two years and save the remaining $10,000 in a high-interest savings account.
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Frequently Asked Questions
How long does it take to get my FHSS money out of super?
You apply to the ATO for a determination, then a release. The ATO estimates 15 to 20 business days from the release request, though it can take longer during busy periods. You should factor this timing into your purchase timeline.
Can couples both use FHSS?
Yes. Each person has their own $50,000 lifetime cap. A couple buying together can release up to $100,000 combined through FHSS, making it especially powerful for joint purchasers.
What happens if I withdraw FHSS money and do not buy a home?
If you do not sign a contract to buy or build within 12 months of requesting a release, you can either re-contribute the amount to super or pay a 20% flat tax on the assessable amount. The ATO may automatically grant a 12-month extension.
Does FHSS affect my super balance at retirement?
Yes, the money you withdraw is no longer growing in super for your retirement. However, you are swapping long-term super growth for a tax-advantaged deposit, and your home is itself a major asset. Most financial commentators consider it a reasonable trade-off for first home buyers.
Sources: ATO: First Home Super Saver Scheme | ATO: Tax Rates for Residents
Disclaimer: This information is general in nature and does not constitute financial, legal, or tax advice. Calculations are estimates only and may not reflect your exact circumstances. Eligibility criteria and dollar amounts may change without notice. Always verify with the relevant government authority, your mortgage broker, or a licensed financial adviser before making decisions.