A common question on many Australians’ minds is can you use your super to buy a house?
Although it is usually intended for retirement, more people are deciding to use their super fund to purchase property. The concessional tax rate and limited access to the funds saved means many Australians find it much easier to save the deposit for their first home compared to other ways of saving.

However, if you are wanting to purchase a home with the money saved using a Self Managed Super Fund (SMSF), you will need to be aware of the unique purchase and loan conditions.

Purchasing Property with a Self Managed Super Fund

If you are purchasing a property using your SMSF, it will need to meet a number of criteria. These legal and tax conditions include passing the Sole Purpose Test Income, no trustees or related persons renting or living in the property, and if purchasing a commercial property it must be used for business purposes only.

The Sole Purpose Test

When self managing your super fund, you are required to undertake the Sole Purpose Test to receive the usual tax concessions and benefits. The main purpose of the test is to determine whether your super is being used to increase the return of the fund and not to provide financial pre-retirement benefits to the trustees. For example, if you are using the SMSF to invest in precious artworks, you are unable to use them to decorate your own home.

Trustees Living or Renting in Property

A key condition of purchasing a property using your SMSF is that no trustee or related parties can live or rent the property. This includes a seasonal or holiday home, so you are unable to use your super fund to purchase a beach home to use in the Summer.

Purchasing Property from a Trustee

Much like how you are unable to live or rent in the property, you cannot use your super fund to purchase property from a trustee or related party. If a family member is selling their home you cannot purchase it using your SMSF as they are considered a related party.

Commercial Property Use

You can use your SMSF to purchase a commercial property and lease it to a trustee or related party, as long as it’s being used solely for business purposes. If you are leasing the property to a trustee or related party’s business, it must be leased at market rate and follow the relevant rules.

Self Managed Super Fund Property Loans

If you intend to take out a home loan using your SMSF, you will need to adhere to some strict conditions as well as take into account certain risks.

Some of these conditions and risks include:

  • Limited Borrowing: Due to the limited recourse borrowing arrangement, you are only able to purchase a single asset (residential or commercial) using your SMSF.
  • No Alterations: You are unable to make any changes to the character of your property until you pay off your SMSF loan.
  • Higher Costs: SMSF loans are usually more costly than other property loans. The fund will also pay 15% tax on the property’s rental income.
  • Possible Tax Losses: Unlike other arrangements, you cannot offset the property’s taxable losses on your income outside of the fund.
  • Cash flow: All loan payments must come from the SMSF so your fund will need to have enough cash flow to keep up regular payments.

The First Home Super Saver Scheme

The First Home Super Saver Scheme (FHSS Scheme) enables people to purchase their first home by saving through contributions to their super.

You are eligible for the FHSS Scheme if you:

  • Are 18 years or older
  • Have not owned any property in Australia (including land, commercial property, or investment)*
  • Have not previously applied for the FHSS Scheme

*If you have owned property within Australia, but fall under the financial hardship category, you may still be able to apply for the FHSS Scheme.

In the case of applying for the FHSS Scheme with a SMSF, you need to determine whether your deed authorises and facilitates the releasing of FHSS amounts to the ATO. You will also need to make the right contributions to receive the FHSS, which include salary sacrifice contributions and personal voluntary contributions.

Seek Professional Advice

Purchasing property through a Self Managed Super Fund can be a complicated process, and failing to adhere to tax obligations can result in significant penalties so it is best to seek the advice of a professional tax agent.

If you are interested in using your SMSF to purchase property, get in touch with the experienced accountants at Stones Sharp. We will be able to assist you with ensuring that your SMSF follows the proper procedures to purchase your property or access the First House Super Saver Scheme.

Shane Borg

Shane Borg


Shane is a Fellow of the Australian Society of Certified Practicing Accountants and a Chartered Accountant.

Shane’s passion is to consider the clients, the client’s business and taxation affairs with a holistic approach whilst providing business mentoring, business strategies, systems development, taxation advice and taxation planning in order to assist his clients and their business achieve their goals.

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