How Can I Use My Super To Buy A House?
Great news for all Australians! Buying a house with superannuation is entirely possible subject to a few simple conditions. You can use your super to buy a house if you are any of the following:
- A first home buyer
- A property investor
- A retiree or over the age of 65
Your next question would most probably be: How do you go about accessing your super to buy a house?
In this post, we’ll not only answer this question but also provide crucial information if you’re thinking of buying a house with your super.
Can I use my super to buy a house?
If you belong to any of the above categories of Australians holding a superannuation account – whether it is with a typical super or a self-managed super fund (SMSF) – you can definitely use your super to buy a house.
First home buyer
First home buyers can access their super under the Federal Government’s First Home Super Saver Scheme (FHSSS). However, the FHSSS scheme is designed for first home buyers who will use only their voluntary personal super contributions (not employer contributions). You can use up to $30,000 of your voluntary contributions – either pre-tax or post-tax contributions – as the deposit on your first house. Starting July 1, 2022, the amount a super member can release from their voluntary contributions will increase to $50,000 per person.
Property investors can use money from an SMSF to buy an investment property. The Australian Taxation Office (ATO) classifies this investment as ‘sole purpose’, which means it can only be used to pay retirement income to SMSF members. It is also governed by a set of tight guidelines, so make sure to clarify these first before proceeding.
65+ or preservation age
The only other time you can use your super to buy a house if you’re not a first-time buyer and aren’t in an SMSF is if you have full access to your super. When you hit 65 (even if you haven’t retired) or reach ‘preservation age’ and have retired, you have full access. Your super is a ‘preserved benefit’, and your preservation age is determined by the ATO depending on your date of birth. If you were born before July 1, 1960, your minimum preservation age is 55, progressively increasing to 60 if you were born after July 1, 1964.
How do I access my super for the FHSSS?
When you’re ready to buy a house using your super, you can apply to the ATO.
The ATO will then evaluate your eligibility and determine your deemed earnings based on your additional contributions.
Consider contacting the ATO as soon as you begin looking for a home to allow for adequate time for the ATO to assess and then release your funds. The ATO will then inform your super fund of the amount of your super savings it can release to you, as well as any tax implications you should be aware of.
More information about this scheme is available on the ATO website.
Is help available so I can access my super to buy a house?
Even with the information provided here, you’re sure to have more questions about how to use your super to buy a house.
What you can do is speak with a trusted mortgage broker to get the information you need.
Get in touch with us and speak to our North Brisbane Home Loans mortgage experts. We’ll be more than happy to help!