Can I use my super to buy a house?

*The total you can withdraw across all years is $50,000 for a single person or $100,000 for two eligible individuals.

How does it work?

You can’t use your existing super; you need to add up to $15,000 extra money per year to your super, up to a total of $50,000. When you’ve saved enough, you ask the ATO to withdraw the extra you added to super, and use that as part of your deposit.

You can add house savings to your super either before tax by salary sacrificing , or after tax by making voluntary contributions.

Note that you’ll probably save less than $15,000 per year, because contributions get taxed 15%, and because there’s a yearly limit for adding money to super – $27,500 per year including your employer’s required contributions.

This method of saving is not for everyone, so make sure you check all the pros and cons below before you access super to buy a house.

Is it right for me?

Benefits if you access your super to buy a house

When you’re struggling to get into the housing market, using your super account to save for a deposit can be appealing for a few main reasons:

 

• Earn returns
  The investment returns you can withdraw from the FHSSS (see the ATO website ) 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. 
• Potential tax savings
  Your super is only taxed at 15% plus another few percent when you take it out – which could be lower than your normal tax rate, helping you to save money faster. 
• Buy a house with a partner
  If you’re buying the house with someone else (e.g. partner or flatmate), they can also add $15,000 per year to their own super to help save for the deposit, as long as they also meet the criteria. 
• Timeframes
  You have 12 months to buy a house with the money (or 24 months with an extension). 

Potential downsides of using super to buy a house

• • Tax on your deposit
    • If you’re on a lower income, there’s much less tax benefit to storing money in super for a deposit.
    • If you sign a contract to buy a property before taking out your super, the ATO may charge you an extra 20% tax, which means you could be worse off than if you’d put your money in a bank.

 

• • Time pressure
    • The ATO says it takes 25 business days for them to release your super for your deposit – long enough that you may miss out on your dream home.
    • You only get one shot to use your super for a house, so if it’s unsuccessful this time, you don’t get to try again later.

 

• • Pressure on your budget
    • You’ll probably have less take-home pay whether you salary sacrifice or make after-tax super contributions, which you may not be able to afford.
    • You can only save up to $50,000 total in your super, which may not be enough.

 

• • Limits on properties you can buy
    • You can only use it for a first home, so if you’ve already owned a property, you can’t use the scheme.
    • You also can’t use this scheme for investment properties, vacant land (unless you have a contract to build), or alternatives in affordable housing, such as houseboats, caravans, or tiny homes.

 

• Locked up savings
  • If you add money to your super and aren’t able to use it for a house deposit, you can’t then take that money back out again. It has to stay in your super until you retire.