Can I Use My Super To Buy a House: A 2022 Detailed Guide

Table of Content

• What are the advantages and disadvantages of using your super to buy a house?
• How to qualify for the First Home Super Saver scheme
• ARE INTEREST RATES ON THE RISE?
• When will my term deposit rates rebound?
• How to use the FHSS to buy your first home
• Withdrawing super for a house deposit: How much can you take?

We believe everyone should be able to make financial decisions with confidence. For all the tips and tricks you need to make that process an absolute breeze, head over here. Or, to find more info on who to speak to before buying, read this. These contributions must be within existing contribution caps.

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What are the advantages and disadvantages of using your super to buy a house?

Remember though, these options aren't for everyone and there are conditions you have to meet. You can keep the money, but the ATO will charge extra tax on it. Your existing employer 9.5% Super Guarantee contributions and these additional contributions of up to $15,000 cannot exceed a combined $25,000 per annum.

Rather than use existing super to buy a property – as can be done through a SMSF – the FHSS scheme helps Aussies save for a deposit faster, because of the concessional tax treatment of superannuation. So you get the benefit of leverage and gearing,” he said. For example, if you request a release of FHSS amounts on 30 June 2021, include the amount in your 2020–21 tax return. This is even though you won’t receive the released amount until July 2021. This means that couples, siblings or friends can each access their own eligible FHSS contributions to purchase the same property. If any of you have previously owned a home, it will not stop anyone else who is eligible from applying.

How to qualify for the First Home Super Saver scheme

Boosting the size of your deposit may mean you avoid paying LMI, and you may also be able to secure a better interest rate on your loan. Pay off all or most of your home in your working lifetime. If you wait longer to buy a home, you may be left with a large home loan balance to pay off in your retirement. If you are in a Self Managed Super Fund , you can use money from the fund to buy an investment property. That’s when you’ll need to meet the eligibility requirements like having never owned property in Australia. The good news is that this means the scheme can be used by each member of a couple for the purchase of a property.

Before-tax super contributions are usually taxed at 15%. If you earn between $45,001 and $120,000, you’ll typically pay 32.5% income tax. The lower tax rate could help to grow your super savings faster than saving the same amount of your after-tax income in a bank account. Well, you can choose to make before-tax contributions to your super account through a salary sacrifice program with your employer. Then you can withdraw the funds to use as a deposit to buy or build your first home. A house deposit is only a portion of the total house cost.

ARE INTEREST RATES ON THE RISE?

From 1 July 2022, the FHSS scheme withdrawal cap will increase from $30,000 to $50,000.

You can contribute up to your existing super contribution caps. Having amounts released under the FHSS scheme does not affect the calculation of your concessional or non-concessional contributions for contributions cap purposes. Your contributions still count towards your contribution caps for the year they were originally made. While FHSS allows you to use your super account to save for your first home, it also has some limitations. First and foremost, you can’t dip into it and take money out like you can with a normal savings account.

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If you're buying the house with a partner or flatmate, you can use a total of $100,000 from super ($50,000 from each of you). The investment returns you can withdraw from the FHSSS and the investment returns on the money you add to your super account may be more than you'd get in a savings account or term deposit with the bank. Once the funds are released, you will have 12 months to purchase the home. If you do not purchase a home in that period, you can either apply for a 12 month extension, return the funds to super, or pay a tax penalty. You can either tell your employer to salary sacrifice the additional contributions, or you can do a transfer from your personal bank account as a member contribution instead.

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. Here is a list of our partners and here's how we make money. Ultimately, whether or not using your super as a deposit is a good idea depends on your personal situation and financial goals. On the downside, using your super as a deposit means that your money is locked up in there.

Can’t quite get the cash together that you need for your dream home? Another option is chatting to your parents or a family member about going guarantor on your loan. Finally, if you can’t save 20%, you might be surprised to know there are ways to buy a home with a lower deposit.

One way of using your SMSF to buy your first home or investment property is to use it as a deposit against a loan. If you’ve got the green light, the next step is to find out if the property you’re looking at meets the SMSF rules. Compare Club does not compare all products in the market.

Read on as we answer all your burning questions, from ‘Can I use my super to buy a house and under what conditions? ’ to ‘How much can I take out of my super to buy a property? Generally speaking, that means SMSFs can’t buy assets from, or lend money to, fund members or other related parties, although there are some exceptions to this rule.