Can you use super to buy a house?

For many Australians, the road to homeownership means leveraging every financial tool at your disposal. As superannuation is typically a person's largest pool of long-term capital, it's natural for the next question to be: Can I use my super to buy a house?

The short answer is yes, but with strict conditions. Your super was created with a specific long-term purpose — your retirement. While accessing super for property is tightly regulated, the Australian government has established specific schemes to help you get closer to your property goals.

In this guide, we’ll unpack the two key pathways for buying property with your super, along with the essential rules, benefits, risks, and alternatives you need to know.

Key Takeaways

• The primary role of superannuation is to fund your retirement, which means you can't freely pull out funds for a property purchase unless you use one of the specific, government-approved schemes.
• The First Home Super Saver Scheme (FHSSS) allows first-time buyers to voluntarily contribute and then withdraw up to $50,000 for a deposit.
• The Self-Managed Super Fund (SMSF) can be used to purchase an investment property, but not your personal home.
• Misusing your super, especially within an SMSF, can lead to substantial fines and tax penalties, potentially undoing years of hard-earned retirement savings.
• If you aren’t eligible for the FHSSS or an SMSF, there are great alternatives like claiming the First Home Owner Grant (FHOG) or using the First Home Guarantee (FHG) to get a low-deposit loan, subject to eligibility.

Understanding how superannuation works in Australia

Superannuation is a system designed to ensure all working Australians save money throughout their careers to fund their lives in retirement. It operates under a highly favourable, concessional tax environment precisely because of its long-term, retirement-focused goal.

Generally, you cannot access your super until you reach your ‘preservation age’ (between 55 and 60, depending on your birth date) and meet a condition of release (like retiring). Any scheme that allows you to access your super earlier, like the FHSSS, is a specific, government-legislated exception to this fundamental rule.

Using the First Home Super Saver Scheme (FHSSS) for your first home

For first home buyers, the FHSSS is the most straightforward pathway to leverage the tax benefits of your super for a property deposit. The FHSSS allows eligible individuals to make voluntary contributions to their super to save for their first home deposit. These contributions fall into two main categories:

• Concessional contributions are made from pre-tax income (like salary sacrifice) and are generally taxed at a rate of 15% when they enter your super fund.
• Non-concessional contributions are made from after-tax income and are not taxed when they enter your super fund.

By using this scheme, you can grow your savings faster because concessional contributions are taxed at a lower rate (15%) than most people's marginal tax rates, and all earnings (such as interest) within your super account are also taxed at a maximum of 15% in the accumulation phase.

To be eligible, you must:

• Be 18 years or older.
• Have not previously owned property in Australia.
• Intend to live in the home you purchase for at least six months of the first year after settlement.
• Apply to the Australian Taxation Office (ATO) for a release authority before signing a contract for the property.

Under the FHSSS, you can contribute up to $15,000 per financial year, with a maximum of $50,000 in voluntary contributions eligible for release. Compulsory employer contributions do not count towards this scheme.

When you withdraw your FHSSS savings, the released amount of concessional contributions and earnings is taxed at your marginal tax rate, minus a 30% tax offset. This generally results in a favourable tax position compared to saving in a standard bank account.

The ATO recommends allowing 15 to 25 business days for the release of your funds, so planning this timeline before signing a contract is crucial. Once you request the release, you have 12 months to either sign a contract to purchase a home or sign a contract to construct a home.

Buying property through a Self-Managed Super Fund (SMSF)

Self-Managed Super Funds (SMSFs) provide a high level of control over your super investments. For those with a substantial super balance and investment experience, buying property with your super via an SMSF can be a viable strategy, but it is strictly for investment purposes only.

Rules for purchasing investment property with SMSF

The property you buy with an SMSF must pass the ‘sole purpose test’: its sole purpose must be to provide retirement benefits to the fund's members.

Key rules include:

• No related parties: The property cannot be acquired from a related party (e.g., a family member or business partner).
• Limited recourse borrowing: If you need to borrow money, you must use a specific structure called a Limited Recourse Borrowing Arrangement (LRBA). This is a complex loan with specific conditions designed to limit the lender's claim only to the purchased asset, protecting the rest of the SMSF's assets.
• Maintenance vs. improvement: There are strict limits on making improvements (changes that alter the character of the asset) while an LRBA is in place, but you are permitted to carry out repairs and maintenance.

Why you can’t buy your own home with an SMSF

The rules explicitly prohibit the SMSF property from being used as a main residence, holiday home, or being leased by a fund member or any related party. Doing so is a clear breach of the sole purpose test and will result in severe penalties from the ATO.

Benefits and risks of SMSF property investments

	Benefits	Risks
Taxation	Rental income and capital gains are taxed at the concessional super rate (15% on income, 10% on capital gains if property is held for more than 12 months).	Substantial penalties if the 'sole purpose test' or other rules are breached.
Control	Direct control over the investment property and its leasing.	High administrative burden and compliance costs (e.g., audits, financial advice, legal fees).
Gearing	Opportunity to use borrowing (LRBA) to amplify returns.	Increased costs (higher interest rates on LRBAs) and reduced cash flow flexibility.
Diversification	Adds a tangible asset to a super portfolio.	Lack of diversification if a large portion of the super balance is tied up in a single property.

Benefits of using super to buy property

For those planning on using your super to buy a house, here’s what you can benefit from:

• Tax concessions: Savings grow in the low-tax super environment (for FHSSS) or benefit from concessional tax rates on income and capital gains (for SMSF investment).
• Increased deposit saving (FHSSS): The FHSSS allows first home buyers to save for their deposit faster due to the significant tax advantage on contributions.
• Investment control (SMSF): Direct control over a tangible asset, allowing you to choose the location and type of investment property.
• Long-term strategy: Property can be an excellent long-term investment, offering capital growth that benefits your retirement fund.

Drawbacks of using super to buy property

Before making your withdrawals, keep these limitations in mind:

• Complexity and cost (SMSF): Setting up and managing an SMSF with property involves high administrative, legal, and financial advice costs.
• Illiquidity: Property is an illiquid asset, so it can't be quickly sold to pay for retirement or other expenses.
• Lack of diversification: Concentrating too much of your super in one asset (property) increases your overall investment risk.
• No personal use (SMSF): The investment property can never be your own home or holiday retreat.

Alternatives to using super for a home deposit

If the restrictions of the FHSSS or SMSF are not fit for your journey, there are several government-backed initiatives and traditional methods that can also assist with your home deposit, subject to eligibility.

First Home Owner Grant (FHOG)

The FHOG is a one-off payment for first home buyers who are buying or building a new home. This grant can directly boost your funds for settlement, separate from any super contribution schemes. The amount and eligibility criteria are determined by your state or territory government, so it’s essential to check the rules for your specific location.

Stamp duty concessions

Most state and territory governments offer significant concessions or even full exemptions from stamp duty for first home buyers, often tied to the value of the property. This can translate into tens of thousands of dollars in savings, drastically reducing the overall cost of buying a home.

Shared equity schemes and traditional savings

Programs like the Australian Government 5% Deposit Scheme (formerly the Home Guarantee Scheme) allows eligible buyers, including first home buyers with a minimum 5% deposit and single parents with a minimum 2% deposit, to purchase a home without paying Lenders Mortgage Insurance (LMI).

The upcoming Help to Buy shared equity scheme offers another path: it features a minimum 2% deposit by having the government contribute an equity stake of up to 30% (existing homes) or 40% (new homes).

Alongside this, traditional savings plans (even in high-interest accounts) remain a low-risk, fully liquid way to build a deposit without the regulations of superannuation.

Conclusion

Circling back to the original question, “Can you use your super to buy a house?”, the picture is now clear: the options may be limited, but the opportunities for tax-effective savings are significant.

Purchasing property with superannuation in Australia is possible, but it is defined by strict rules and a requirement for diligent compliance. For first home buyers, the FHSSS is a powerful, tax-effective savings vehicle. For experienced investors, an SMSF gives you control over a residential or commercial investment property, but with significant responsibility.

The key to navigating this landscape is ample preparation and professional guidance, especially before making any decisions that could affect your retirement savings.

Explore your property options with confidence. Contact us today to find a new home or investment that aligns with your financial strategy and lifestyle aspirations.

Disclaimer: All information set out in this article and FAQs, including but not limited to estimated calculations, statistics, opinions, and external links, is provided as a general guide only as at the date of publication and does not constitute advice. Actual figures and the suitability of the information may vary depending on individual circumstances, lender terms, property location, and market conditions. Purchasers are responsible for seeking independent professional advice or making their own enquiries in relation to any investment decisions. No representations or warranties are made as to the accuracy, currency, or completeness of any estimates or their contents.
Date of publication: November 2025.