But wait, there's more for couples
Plus, just for you, I'll throw in a government guarantee.
But wait, there's more. You can have two for the price of one, with free delivery anywhere. And I'll throw in a set of steak knives. Sorry, forget the steak knives - got a bit carried away. With that return you could afford to buy your own.
Incredibly, this deal is being offered by the Gillard government, which is why you'd better get your skates on. It might not survive next week's budget.
This government isn't good at selling its achievements - not an overly long list, so you'd think what there is might have received special attention.
Yet an offer the government was convinced would appeal to 750,000 first-home buyers has signed up just 39,000.
Oh, I should have mentioned the savings break is available only to first home buyers, who must use it to buy a unit or house.
But then, it's not really - it extends to second home buyers because you can own any number of investment properties so long as you've never lived in them.
Where was I? Oh yes, a couple buying their first home can earn $2040 a year tax-free from the government for contributing to an official first-home saver account. And the interest is taxed at a flat rate of 15 per cent, no matter what your income.
How could 711,000 home buyers resist?
I suspect largely through a misunderstanding of the scheme, which looks more restrictive than it is.
The official description of the scheme says you have to contribute at least $1000 to the account for each of four financial years. The government matches that with a 17 per cent contribution up to a maximum of $1020 on $6000.
A couple can have two accounts, one for each partner, and so potentially get $1020 a year each.
Members Equity Bank, the most enthusiastic provider, pays 3.85 per cent, which is taxed at 15 per cent, so that's an annual return of almost 21 per cent.
And the four-year rule is a furphy. Let's face it, that'd be a lifetime for a first-home buyer to save or wait.
Which reminds me, if after four financial years you change your mind about buying a property or break up with your partner, the money is flicked into your super, which is more like an eternity.
But note I said financial years. That's really two years and two days, which, come to think of it, maybe the government isn't keen for you to know.
The fact there are two financial years in every ordinary year - trust me - is the let-out. The trick is to whack $1000 in (better still, $6000 if you can afford it) on June 30 this year, the same again on June 30 next year and then again the next day (which gets to three financial years).
Here's the clincher. Buy your home in that third financial year (really year two) and you won't even have to make another contribution for the fourth financial year; indeed, you won't be allowed to, because by then buying a house counts as saving.
The catch is finding a bank that offers the accounts. Forget the big ones, but some smaller banks, credit unions and building societies do (listed at apra.gov.au).
Tell them I sent you.
Read David Potts in Weekend Money, every week with The Sunday Age.
Twitter @moneypotts
Frequently Asked Questions about this Article…
The First Home Saver Account is a government-backed savings scheme for first-home buyers that tops up your contributions. The government matches 17% of your contributions up to a maximum of $1,020 on $6,000 saved each year, effectively giving savers a bonus on eligible deposits.
Each partner can open their own First Home Saver Account and qualify for the 17% government match up to $1,020 a year. That means a couple can receive up to $1,020 each, or $2,040 combined, which the article describes as a tax-free government contribution.
Interest earned in a First Home Saver Account is taxed at a flat 15% rate regardless of your income. The article cites Members Equity Bank paying 3.85% interest; when you combine that interest (after the 15% tax) with the government bonus, the effective annual return can be close to 21% in that example.
The scheme is aimed at first-home buyers who must use the account to buy a house or unit. However, the article notes it can effectively extend to some second-home buyers: you can own any number of investment properties and still qualify as long as you've never lived in them.
Officially you must contribute at least $1,000 in each of four financial years to qualify for the full government match. The article explains a timing tactic: because contributions are recorded by financial year, making contributions on June 30 in consecutive years and then again the next day can get you credit across multiple financial years more quickly — and buying your home in the third financial year counts as a saving for the fourth year so you may not need a further contribution.
If, after the scheme's required period, you change your mind about buying a property or break up with a partner, the money in the First Home Saver Account is transferred into your superannuation (super) account, according to the article.
The article suggests uptake has been low largely because the scheme looks more restrictive than it really is and many people misunderstand the rules. Another factor is limited availability — not all major banks offer these accounts.
Smaller banks, credit unions and building societies are more likely to offer First Home Saver Accounts. The article points readers to the APRA website (apra.gov.au) for a list of institutions that provide the accounts.
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