Hi all,
Looking for some advice or shared experience, because I’m honestly pretty frustrated and confused by how the First Home Super Saver (FHSS) scheme actually works in practice.
My situation (timeline)
- Last financial year: I made voluntary contributions into Super to use the FHSS scheme as a first home buyer.
- Last year: I requested an FHSS release from the ATO and had money paid out under the scheme. I have not purchased a house yet.
- I understand now but not at the time that:
- You can only ever have one FHSS release in your lifetime later
- If you don’t end up buying a house in time, you either:
- recontribute the released amount back to super, or
- pay a flat 20% FHSS tax on the assessable released amount.
This financial year (June 2026):
- I made a $15,000 personal contribution to Super via direct debit.
- My thinking at the time was:
- I could add this money into super for FHSS purposes,
- then later request another release when I was ready to buy, and
- in the meantime get a tax deduction and “boost” my first home buyer position because that’s how my financial adviser explained it to me.
Shortly after contributing the $15k, I realised some pretty important details:
- Once you have already had an FHSS release, you cannot request another FHSS release ever again. The “one release only” rule is strict.
- The tax deduction for concessional contributions used under FHSS is effectively unwound when the FHSS release happens – the assessable FHSS amount is taxed at your marginal rate (with an offset), so the idea of a permanent “free” tax win is not as simple as it sounds.
- If you don’t manage to buy a home in time, your only options are:
- recontribute the released amount as non‑concessional (after‑tax) super, or
- keep the cash and cop an extra 20% FHSS tax on the assessable amount.
So my original plan (“add more money, then later request another FHSS release”) is simply not allowed under the rules. My misunderstanding, but it was based on the way it was explained to me.
What I tried with Super
After realising this, I contacted Super and asked them to refund the $15k contribution, explaining that it was paid based on a mistaken understanding of how FHSS works.
Their response:
- My refund request has been declined.
- Under APRA guideline SPG 270, this is not an “administrative error” because I knowingly made the contribution.
- They said they are not authorised to refund non‑administrative errors and that the ATO deals with excess non‑concessional contributions etc.
*5k is now just a normal after-tax contribution sitting in super, and they won’t refund it.
*that doesn’t make sense to me - I’m seeing:
- When you use FHSS, you only get to withdraw up to 85% of certain contributions (not 100% of what you put in).
- After the FHSS release, the tax deduction benefit gets effectively reversed through the way the released amount is taxed in that financial year.
- If you then don’t buy a house within the FHSS timeframe (which is very realistic when property prices are jumping every week), you either:
- recontribute the released amount back into super as after‑tax money (and generally can’t touch it until retirement), or
- keep the money and pay an extra 20% FHSS tax on the assessable released amount.
So if:
- there’s no lasting tax deduction once everything is washed up,
- you can only pull back 85% of your contributions under FHSS, and
- you risk a 20% flat tax if you can’t buy in time,
then what is the actual benefit of all this complexity if your timing or the market goes against you?
To me, this looks a lot less like “government help for first home buyers” and more like a system that can easily backfire on you if you don’t tick every box perfectly and the market runs away.
Where I’m at now
- I have $15k stuck in super as a personal contribution.
- I have about $13k from the original FHSS release still in my bank account.
- I’m still within the FHSS timeframe but I’m not confident I can buy a house in time, given current prices and borrowing capacity.
- I’ve spoken with the ATO to ask:
- Can the $15k be treated as the FHSS recontribution for my earlier release so that if I don’t buy, I avoid the 20% FHSS tax? Answer was YES.
For context:
My financial adviser originally told me to do this – contribute into super, use FHSS to get a tax deduction and help with the first home buyer scheme. In reality, I’m now sitting here with $15k effectively locked away in super, a single FHSS release already used, and a genuine risk I still can’t buy.
My questions for OzBargain
Has anyone else been in a similar position:
- Used FHSS,
- Didn’t end up buying in time,
- Had to choose between recontribution vs paying the 20% FHSS tax?
Has anyone successfully convinced a fund to refund a personal contribution that wasn’t an admin error, just a bad FHSS strategy?
If the ATO confirms the $15k can be treated as the recontribution:
- Is my best move simply to claim the $15k as recontributions to avoid at least the 20% FHSS tax?
- Or is there any smarter or less painful approach?
More generally, for those who’ve actually gone through this:
- Is FHSS really worth it once you account for the 85% withdrawal, tax wash‑up, and risk of being forced into recontribution or copping the 20% tax?
Any advice, similar experiences, or suggestions to minimise the damage would be really appreciated.
Thanks.
TLDR: OP listened to wrong advice from FHSS and is now complaining about FHSS in general.
You can withdraw from FHSS after signing, so most of your rant is useless. Feels like you can ask most of these questions to your finance advisor.