By Chaice Paterson, CEO & Founder, Low Deposit Homes | Updated June 2026

The biggest tax benefit Australian first home buyers miss in 2026 is the First Home Super Saver Scheme — using voluntary super contributions taxed at 15% to fund a deposit, then withdrawing at concessional rates, delivers approximately $5,000-$15,000 in tax savings for a couple. Combined with stamp duty exemptions (up to $38,000 saving in QLD), depreciation benefits on new builds (up to $40,000 deductible over 5 years if the property ever becomes an investment), and the absence of CGT on your primary residence (potentially $200,000+ saved over a property lifetime), the tax dimension of first home buying matters more than most buyers realise. Here’s the complete picture.

How does the FHSSS save tax?

The First Home Super Saver Scheme (FHSSS) is the most tax-efficient way for first home buyers to save for a deposit. The mechanism:

Step 1: Make voluntary super contributions. You can contribute up to $15,000 per financial year (up to $50,000 lifetime) into super via:

• Salary sacrifice (employer arrangement) — contributions taxed at 15% in super instead of your marginal rate
• Personal deductible contributions — claim deduction at tax time

Step 2: Wait, contributions grow tax-advantaged. Earnings inside super are taxed at 15% (vs your marginal rate outside super).

Step 3: Apply to ATO for FHSSS determination. Tells you exactly how much you can withdraw (contributions + deemed earnings).

Step 4: Withdraw for deposit. Withdrawal taxed at your marginal rate minus a 30% tax offset. For most first home buyers (32.5%-39% bracket), the effective tax on the withdrawal is 2.5%-9% — far less than the marginal rate you would have paid outside super.

Real example: A couple earning $90,000 each contributing $15,000 each per year over 2 years ($60,000 total). Tax saved compared to saving the same amount post-tax: approximately $9,800.

Critical timing: apply for the FHSSS determination from the ATO BEFORE signing a land contract. The determination is provided instantly via myGov. For determinations made on or after 15 September 2024, you then have 90 days from contract signing to make the release request. The release itself takes 15–25 business days. Settlement is the absolute deadline.

What’s the value of the stamp duty exemption?

Queensland: First home buyers purchasing brand-new homes pay zero stamp duty, regardless of price. On a $1M new build, that’s approximately $38,000 saved compared to standard transfer duty rates. There is no upper price cap on this exemption.

Victoria: First home buyers pay zero stamp duty on properties with dutiable value under $600,000. Sliding scale concession applies $600,001-$750,000. Above $750,000, standard transfer duty rates apply with no FHB concession. For house and land packages signed during construction, only the land component counts toward dutiable value — meaning $700K-$800K packages can often deliver full exemption.

These exemptions are paid at settlement (or rather, NOT paid at settlement — your conveyancer simply doesn’t include them in the settlement statement). They’re real money that stays in your pocket.

How does depreciation work on a new build?

If your home ever becomes an investment property (you move out and rent it), new builds offer the maximum depreciation benefits available under Australian tax law:

Capital works deduction (Division 43): 2.5% per year of construction cost over 40 years. On a $400,000 build cost, that’s $10,000 per year deductible.

Plant and equipment (Division 40): items like appliances, carpets, blinds, hot water systems — depreciated over their effective life. For a brand-new build, this can total $40,000-$60,000 of deductions over the first 5 years.

Why this matters even if you don’t plan to invest: life changes. The depreciation schedule is significantly more generous on brand-new builds because (a) plant and equipment is all new, and (b) the 40-year capital works clock starts at completion. An established home built in 1985 has 0 years of capital works deduction remaining (40-year clock expired in 2025).

What’s the value of no CGT on your primary residence?

Australia’s main residence exemption is one of the most valuable tax benefits in the system. Your primary residence is exempt from capital gains tax on sale.

Real value:

• Average Australian property growth over 30 years: approximately 6.5% per year
• A $900,000 property at 6.5% growth over 25 years becomes approximately $4.34M
• CGT-free gain: approximately $3.44M
• Tax saved (assuming 50% CGT discount and 37% marginal rate): approximately $636,000

The CGT exemption applies fully only while the property is your primary residence. If you rent it out at some point, partial CGT may apply. For most first home buyers who live in the property long-term, this benefit is substantial.

What about negative gearing if my home becomes an investment?

If circumstances change and you rent out the property:

Negative gearing = interest and expenses exceed rental income, with the loss deductible against your other income.

For a typical $850,000 new build in Queensland rented at $620/week:

• Annual rental income: approximately $32,240
• Annual expenses (interest at 6%, rates, insurance, management): approximately $54,000
• Negative gearing loss: approximately $21,760
• Tax saved at 37% marginal rate: approximately $8,050 per year

Combined with depreciation (additional $10,000+ deductible), the after-tax holding cost can be significantly lower than the pre-tax cost.

How is Help to Buy treated for tax purposes?

The government’s equity share under Help to Buy is NOT taxable income to you while you hold the property. When you eventually buy out the government’s share (or sell), the gain on the government’s share is theirs — not yours. You only pay CGT (if applicable) on your share.

Critical rule for first home buyers using Help to Buy: if circumstances change and you want to convert the property to an investment (rent it out), you must first buy out the government’s share at market value before changing the property’s use. Help to Buy is a scheme for owner-occupiers — the government’s equity participation isn’t designed to remain in place once you stop living in the property. Failure to buy out the government share before converting can breach scheme conditions and create both legal and financial complications.

If converting to investment is on your horizon, plan for that buy-out. The maths can still work — you’ve built equity through repayments and (likely) capital growth, the buy-out is funded from refinanced equity or savings, and from that point you own 100% of the property and can rent it out.

The mechanics while you hold Help to Buy:

• Government contributes up to 40% on a new build = up to 40% government ownership
• You pay 60% of any future capital gain (your share)
• You pay 60% of any capital improvements cost
• You can buy out the government’s share at any time at market value

“Most first home buyers don’t think about tax until tax time — by then it’s too late to optimise. The FHSSS application BEFORE contract signing is the single biggest tax decision a buyer makes. Get the timing right and the rest takes care of itself.” — Chaice Paterson, founder of Low Deposit Homes

Frequently Asked Questions

Q: Do I get the FHSSS tax benefit even if I don’t end up buying? You can withdraw FHSSS funds anytime within 12 months of receiving the determination. If you don’t buy in that window, the funds remain in your super and you can apply for a new determination later. No tax penalty for delaying.

Q: Can my first home purchase reduce my income tax for the year I buy? Generally no — the property is your primary residence, so most expenses aren’t deductible. Exceptions: a portion of home office expenses if you work from home; some moving expenses if relocating for work. FHSSS tax savings are realised at the time of contribution, not purchase.

Q: How does stamp duty exemption appear at tax time? It doesn’t — you simply paid zero stamp duty. There’s no annual tax return entry for it. The saving is realised at settlement.

Q: If I move out within 6 months of buying, does that affect tax treatment? For first home buyer schemes (5% Deposit Scheme, Help to Buy, FHG): most require you to live in the property for at least 6 months within the first 12 months. Moving out earlier may breach scheme conditions and result in clawback. Speak to your broker/lender before changing plans.

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Low Deposit Homes operates under Winning Homes Australia Pty Ltd (ACN 633 321 758). All calculations are indicative. Individual circumstances may vary. This is not financial advice.