Home ownership will soon be easier for first-time buyers, with the government announcing changes to the First Home Saver (FHS) Account scheme this week. The Minister for Housing Tanya Plibersek and Treasurer Wayne Swan revealed plans to increase flexibility for FHS Account-holders trying to save for their first home. “We’re improving the FHS Accounts to help address the housing affordability challenge faced by so many young Australians,” the Treasurer said in his Budget speech.

Currently, an FHS Account must be held for four financial years before the account-holder can access their savings to buy a dwelling. If a home is bought prior to the end of the four-year period, the account is closed and the balance is transferred to a superannuation fund. However, under changes announced as part of the 2010/11 Budget, the four-year period will remain, but an account-holder will have the opportunity to buy a home at any time, with the funds simply being transferred into an approved mortgage at the end of the qualifying timeframe. The government will make draft amendments available for consultation in the coming months, with the changes coming into effect following Royal Assent of the legislation.

The various FHS Account concessions already in operation will remain. The government will continue to provide 17% on the first $5,000 (indexed) deposited by an individual account-holder each year. Earnings will still be taxed at 15% and withdrawals will remain tax-free when they’re used to purchase a home. Couples also have the opportunity to combine their individual accounts and purchase a home together. The account-holder still can’t make additional contributions beyond the $75,000 (indexed) account limit, but the funds will continue to earn interest and outstanding government contributions after that time.