Can I Buy a House With My Superannuation?

Buying a house with your superannuation is possible, but there are some things you need to understand before doing so.

There are actually two parts to the question, ‘can I buy a house with my superannuation?’.

There is buying a house to live in as your home and then there is buying a house as an investment property, or maybe even a holiday house.

Depending on what you are trying to achieve, the answer might be different.
 

Can I Buy a House With My Superannuation To Live In?

 
If you plan on using your superannuation to purchase a house to live in, you must first withdraw however much you need from your super account into your personal bank account and then use that money to buy a house.

You are unable to buy a house to live in if that house is owned within your super account, even if you have a self managed superannuation fund (SMSF),

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So, how do you withdraw your super? In order to have full access to your superannuation and withdraw it into your personal bank account, you must first meet a superannuation condition of release.

The most common forms of full conditions of release are ‘retirement’ and ‘reaching age 65’.

Retirement can include stopping work after reaching your preservation age with no intention of returning to full time or part time work, or having an employment arrangement come to an end after age 60. Click here to read more about the retirement definitions.

Reaching age 65 is self-explanatory.
 

Can I Buy a House With My Superannuation For Investment?

 
You are able to use your superannuation savings to buy an investment property or rental property; however, there are strict guidelines on how you must do this.

In order to buy a house or commercial property for investment using your superannuation, you would need to setup a Self Managed Superannuation Fund (SMSF), as most other superannuation funds have limited investment options that generally do not include direct property investments.

Furthermore, you need to ensure that the Trust Deed of the SMSF allows it, as well as the SMSFs Investment Strategy.

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A SMSF is a superannuation fund managed by you, whereby you are the trustee of the super fund. There can be large costs associated with setting up and running a SMSF, as well as a myriad of administrative and legal responsibilities associated; so this is something you should research thoroughly before getting into.

Importantly, a property owned within a SMSF is unable to be used for personal purposes, unless it is business real property, which can be rented to your business, provided it is done at arm’s length and for the benefit of the members of the SMSF. Again, purchasing business real property within a SMSF has many rules and limitations, so you should do your research and obtain professional advice before exploring this option

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Can I Use My Superannuation For A House Deposit?

 
If you are wanting to buy a home to live in or a holiday house, you are unable to purchase this within a super account or SMSF. You would first need to have the ability to access your superannuation by meeting a superannuation condition of release and then withdraw it from super. However, see FHSS option below.

As a house deposit is only a portion of the total house cost, you might be able to withdraw enough from super while you are still working, provided you have reached your superannuation preservation age. This done by starting a TTR Pension, which allows you to withdraw up to 10% of your account balance each year. However, you should consider any tax payable on the withdrawal before doing so, particularly if you are under age 60.

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Alternatively, if you are purchasing business real property or an investment property within a SMSF, you may be able to use the limited recourse borrowing arrangement (LRBA) provisions to borrow within the SMSF to purchase the property.

There are many risks and limitations involved in borrowing within super, so you should make sure you completely understand the process, costs, limitations and risks associated with this prior to borrowing or purchasing a property. The loan provider will also legally require you to seek advice from a financial planner before lending your SMSF any money.
 

Can I Use My Super To Buy My First Home?

 
You are unable to use your superannuation to buy your first home to live in, unless you have met a full superannuation condition of release, as noted above.

However, you can use the First Home Super Saver Scheme (FHSS) to save towards your home deposit. This is done by making voluntary concessional or voluntary non-concessional contributions into your super account, then applying for a release and withdrawing up to $15,000 plus earnings from any one year or $30,000 plus earnings across all years.

Voluntary concessional contributions include salary sacrifice contributions and personal concessional contributions. Voluntary non-concessional contributions are after-tax personal contributions. Click here to read about the difference between concessional and non-concessional contributions.

The benefit of the First Home Super Saver Scheme is that voluntary concessional contributions can reduce your personal income tax. Also, both types of contributions, when invested within super, will have earnings taxed at a maximum of 15%, which may be lower than your individual tax rate, allowing you to save for your deposit sooner.

Make sure you understand the FHSS rules in full before using it to save towards your first home. You can read more here.

Chris Strano

Chris Strano created SuperGuy to help the average punter navigate through the complex and ever-changing super rules. It has since become one of Australia's leading digital super resources. If you’re looking for more personalised advice, have a chat with one of our experts at www.superguy.com.au/need-advice

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14 Comments

  1. Mark

    Hi I earned my super whilst on a 457 and returned to Europe.
    I have founda house in Sweden for around 50 thousand dollars. Can i use my super to buy this house under the first time buyers scheme?

    Reply
  2. Mel

    Hi Chris, I have been contributing to super for 34yrs, but am still only 51.

    I have a current super amount of 725000, 160,000 is in an accumulation account,
    what criteria do I need to meet to withdraw the money in the accumulation account only, (the rest is in a defined benefit) to set up a SMSF and purchase an investment property..

    Reply
    • Chris Strano

      Hi Mel,
      Congratulations on such a solid super savings strategy. As you can see, the benefits of long term contributions has paid off.
      In order to access your accumulation savings, you need to meet a superannuation condition of release. The most common condition of release is retirement and includes retirement after age 60, or reaching age 65. Once you reach age 60, you can have limited access to your super through a transition to retirement pension even if you are still working.
      I’m not going to lie, when someone who has worked their whole life to build up their super savings says they are going to setup a SMSF to purchase an investment property, it sends a chill up my spine and I begin to feel nauseous. If you really plan on doing this, please research all of the costs associated, not only with the SMSF, but also of the property itself. Be wary of any promoters/developers trying to convince you that it is a good idea. And, consider the lack of diversification of having all of your savings and your total retirement lifestyle hinging on a single asset to meet your needs.
      All the best,
      Chris
      Related Posts
      Can I Access My Super at 60 and Still Work?
      Definition of Retirement for Super Purposes

      Reply
  3. Edward

    Hi , how can super help us for deposit for first home? My contribution is approx 80k only. I dont intend to grow old in australia so I am not concern with retiring. I have retirement benefit plan from my home country.

    Reply
    • Chris Strano

      Thank you. You can find the answers to your question in the article above.

      Reply
  4. Kez

    Gday Chris…
    My hubby has recently turned 60 and hopes to retire at about 65 to 67. He has a Super total of around 315,000 and a solid well paying job. As we have only been married for eight years and have both previously bought and sold houses, we do not qualify for any government assistance and have never been able to raise a large enough deposit to buy a home together. At our ages, renting, whilst it has advantages, seems such a waste of money and being subject to rent inspections and answerable to an agency and landlords, is inconvenient and invasive. We are also concerned that, once in retirement, we would not be able to continue to pay the average high rent on a private home. We would like to know if we can access some of the super for: either a large deposit on a home loan, or to perhaps buy a small home outright BEFORE he retires? If neither of these options are allowable, could we withdraw a lump sum towards a house after he retires? If you have any advice and/or tips, we will be most grateful. Thanks so much.

    Reply
    • Chris Strano

      Hi Kez,
      Thanks for your question. You are able to make a lump sum withdrawal from super once you meet a superannuation condition of release, such as retirement or reaching age 65. Prior to that, a TTR Pension is generally available, whcih allows you to access up to 10% of your account balance each financial year. Tax is likely to be payable on any super withdrawals under age 60, but over age 60 is usually tax free.
      Once a withdrawal is made from super, you are free to do with it what you wish. However, be mindful that withdrawing super reduces your retirement savings, whcih could result in lower income throughout retirement.
      There are many other things to consider with making super withdrawals. Given your age, your husband’s solid income and your intentions, my best advice would be to obtain personal financial advice to compare the financial benefit of various scenarios (i.e. buying a home now vs continuing to rent vs buying a home when your husband retires). This can give you confidence in which strategy is best for you and you can then work towards achieving it.
      Kind Regards,
      Chris
      If you like, feel free to contact us to arrange a free 15-minute obligation free chat to see if personal advice would be suitable for you https://www.torowealth.com.au

      Reply
  5. Steve Emond

    Can I pay my house off when I reach preservation age with my Super

    Reply
    • Chris Strano

      Hi Steve, reaching preservation age does not, in itself, provide you with access to your super. Once you reach preservation age you can start a TTR pension – even if you are still working, which allows you to receive an income up to 10% of your account balance each financial year. However, while under age 60, tax may be payable on this.

      In order to have full access to your super, including lump sum withdrawals, you need to meet a superannuation definition of retirement, which is employment related. Otherwise, you need to be over age 65, at which stage there are no restrictions on accessibility.
      Related posts
      What is a superannuation definition of retirement?

      Reply
  6. Bob

    Can a 68 year old age pensioner withdraw all his super,buy a unit,sell existing home and downsize to 64 year olds wife,s super

    Reply
    • Chris Strano

      Hi Bob, this could work provided it was done in the correct sequence with the right timing and satisfied the requirements, particulary with the downsizing rules. I woudl strongly suggest obtaining financial advice is you plan on implementing this strategy. Incorrect implementation could result in a loss of Age Pension and/or inability to recontribute funds into super.
      Read more about the downsizing rules here.
      Regards,
      Chris

      Reply
  7. Carol Taylor

    Can my husband 65 take a lump sum to pay of balance of morgage will this have an effect when we apply for pension with centre link ??

    Reply
    • Chris Strano

      Hi Carol,
      Being age 65 signifies a full superannuation condition of release providing unrestricted access to your super.
      Your main residence, under current rules, is exempt from Age Pension assessment. Therefore, reducing the mortgage shouldn’t affect entitlements. In fact, it may actually improve Age Pension payments, as you will have less investment assets (super).
      Regards,
      Chris
      Related Posts
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      Super rules for Over 65
      Lump Sum Withdraw from Super Over 65

      Reply

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