While initially designed as simply a way to save money for retirement, superannuation has morphed into a tool for buying property.
While it might not be as simple as withdrawing super and buying a home, by using a self-managed super fund (SMSF) or tapping into the federal government’s First Home Super Saver (FHSS) scheme, it’s possible to buy a house, thanks to the tax benefits on offer.
Australians who set up a SMSF can decide where their super is invested and that can include investment properties, but not a place to live. And through the FHSS scheme, first-time buyers can save for a deposit, via voluntary contributions, inside their superannuation account.
Here’s everything there is to know about using super to buy a house.
Using a self-managed super fund (SMSF) to buy a house
Under the rules of a SMSF, Australians can use their superannuation to buy an investment property, but not one they plan to live in.
The property can be purchased through the SMSF; a fund that can have between one and four members. The members make their own collective decisions about how their superannuation is invested.
This could still mean investing in shares, but with property experiencing stunning growth in the last decade or so, many people instead include houses as part of their investment strategy and retirement plans.
Setting up a SMSF is a highly regulated process, and it’s smart to get professional financial advice to understand the responsibilities and set up the fund correctly.
Buying a house to live in? WHAT CONFUSES FIRST HOME BUYERS?
Use SMSF as a deposit
Industry guru Michael Yardney, the chief executive of Metropole Property Strategists, explained how people can use super in a SMSF as a deposit to secure a loan to then buy an investment property.