Using money in your super to buy a house is not generally possible in Australia. You can't just pull your superannuation out of your fund and use it as a deposit, or to pay for the house in full. There are some exceptions to this rule, however. If you're an eligible first home buyer you can use the First Home Super Saver Scheme to pull out some of your voluntary extra super contributions (but not compulsory super payments) to use for a deposit. There are tax savings when doing this.
Property investors with self managed super funds (SMSF) can buy properties through their funds, but only for investment purposes. If you are nearing retirement age, you may be able to withdraw some or all of your funds to buy a home too. We explain the age requirements below.
The First Home Super Saver scheme explained
In 2017 the federal government announced a scheme to help first home buyers get a deposit together for a property purchase. The scheme came into law on 1 July 2018 and applies to voluntary super contributions made since July 2017.
First home buyers can access up to $15,000 in super contributions per year, up to $30,000 in total per person. A couple buying a house could save up to $60,000 in voluntary superannuation contributions over 2 years.
The biggest benefit of the scheme is that you can earn a higher rate of return on money in a super fund (compared to a savings account) while paying lower tax on the funds (just 15% compared to your usual tax rate) when you salary sacrifice.
Say you currently pay tax of 34%. By salary sacrificing and saving $30,000 over 2 years, you'll pay just $4,500 tax instead of $10,200 tax. That's a difference of $5,700, money you can now put towards your first home deposit.
This is because superannuation is designed to fund your retirement, not to help you fund the essential purchases you make throughout your life. The purchase of an investment property is allowed because it gives you the potential to earn rental income and take advantage of a capital gain when you sell the property, increasing your retirement savings.
Accessing your super before you retire
There are strict rules in place to prevent Australians from accessing their superannuation balance before they retire. These rules are designed to ensure that Australians have enough money to enjoy a comfortable lifestyle once they stop working.
To access your super before your retirement you’ll need to satisfy a condition of release. Some common examples that might allow you to access your super early are if you suffer a serious illness or disability, or if you are experiencing extreme financial hardship (including receiving Commonwealth income support payments).
Using super for a deposit on a house is not a condition of release.
What if you're close to retirement age?
If you’ve reached the preservation age, which is 55 years for Australians born before 1 July 1960, and at least 56 for people born after 1 July 1960, the rules surrounding early access to your super aren’t quite as strict.
If you fit this category and you want to access your super benefits to put down a deposit on a house, there are 3 options to help you get the funds you need:
Retire. If you’ve reached your preservation age and you retire, you can withdraw your super benefits. However, you should be aware that you may need to pay tax on any super benefits you withdraw before reaching 60 years of age.
Turn 65. You get full access when you turn 65 even if you haven't retired, and you can use any or all of these funds towards a house purchase.
Set up a transition to retirement (TTR) pension. This option is designed to allow Australians who have reached their preservation age to keep working while also accessing some of their super benefits. You can withdraw between 4% and 10% of your pension account balance each year.
There is a range of financial and taxation implications to consider if you choose any of these approaches, so ask your accountant for their expert advice.
Guarantor loan. If your parents own their own property and are willing to help out they could guarantee a portion of your deposit. It's not without risks but it's a great option for some buyers.
The first home loan deposit scheme. This new scheme involves the government guaranteeing 15% of your deposit, helping you avoid lenders mortgage insurance costs.
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This is due to the simple fact that superannuation is designed to fund your retirement, not to help you fund the essential purchases you make throughout your life. The purchase of an investment property is allowed because it gives you the potential to earn rental income and also take advantage of a capital gain when you sell the property, thereby increasing your retirement savings.
It’s also worth pointing out that there are limits on how much you can borrow when taking out an investment property loan through an SMSF, and the tax benefits of investing through super are different from when you invest using your own money. Our guide on investing in property through your SMSF explains all the ins and outs.
In the case of purchasing the house for your daughter, you may consult this with a mortgage broker for technicalities. Otherwise, the property owner would be under you.
Hope this helps! Feel free to message us anytime should you have further questions.
I am 37 years old with a 14 month old daughter and another one due shortly.
I was renting but couldn’t save for a house deposit so I have moved back to my parents with my partner to save. I still find it hard to save the money I need for a deposit quick enough and was wanting to see if I can access my super to take out enough for a deposit for a house.
It’s hard to be all living in a house together with 4 adults and 2 kids.
Thank you for your question and for contacting Finder.
I’m afraid that currently, it’s not possible to use your super balance as a deposit to buy a principal place of residence. This is because your superannuation is designed to fund your retirement and not to help you fund the essential purchases you make throughout your life.
If you’d like to check your options for a home loan, you’d be best to speak to a mortgage broker who will take all your circumstances into account and offer you a range of lending options.
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Hi is it possible for me to use my superannuation as a deposit for my daughter to use as deposit for her house
Hi Aaron,
Thanks for your message and for visiting finder.
This is due to the simple fact that superannuation is designed to fund your retirement, not to help you fund the essential purchases you make throughout your life. The purchase of an investment property is allowed because it gives you the potential to earn rental income and also take advantage of a capital gain when you sell the property, thereby increasing your retirement savings.
It’s also worth pointing out that there are limits on how much you can borrow when taking out an investment property loan through an SMSF, and the tax benefits of investing through super are different from when you invest using your own money. Our guide on investing in property through your SMSF explains all the ins and outs.
In the case of purchasing the house for your daughter, you may consult this with a mortgage broker for technicalities. Otherwise, the property owner would be under you.
Hope this helps! Feel free to message us anytime should you have further questions.
Cheers,
Nikki
I am 37 years old with a 14 month old daughter and another one due shortly.
I was renting but couldn’t save for a house deposit so I have moved back to my parents with my partner to save. I still find it hard to save the money I need for a deposit quick enough and was wanting to see if I can access my super to take out enough for a deposit for a house.
It’s hard to be all living in a house together with 4 adults and 2 kids.
Hi Kristina,
Thank you for your question and for contacting Finder.
I’m afraid that currently, it’s not possible to use your super balance as a deposit to buy a principal place of residence. This is because your superannuation is designed to fund your retirement and not to help you fund the essential purchases you make throughout your life.
If you’d like to check your options for a home loan, you’d be best to speak to a mortgage broker who will take all your circumstances into account and offer you a range of lending options.
Regards,
May