Using Super Fund To Buy Property



There are many ways to fund your purchase of property or building. Sometimes, those means are a lot harder to use, depending on your circumstances. There are also instances when you may have the means, but using them is probably not the right move.


For example, consider the notion of purchasing real estate using superannuation. First, let’s define the term that probably looks unfamiliar to most of you.


The term means one of two things, depending on which side of retirement you’re on. If you’re not retired yet, it’s the amount of money you pay to build towards a future pension. If you are retired, it’s the amount you get from what you’ve built up.


Now, let’s ask ourselves if using that money as a good idea for buying property. Not just a home, mind you. We’re expanding that to cover all property because superannuation is very investment-driven.


The most general advice I can give is that if you do this, you’ll want to mix a home loan into the situation. It’s much less hassle and allows you a bit more leverage.


This type of property purchase can usually be somewhat complicated. There’s a lot of paperwork involved, pieces of bureaucracy that are meant to make a superannuation fund challenging to waste away. This is not something that most people allow to be done on a whim.


This also limits the ability to use it for tax avoidance.


Acquiring residential property with a super fund isn’t easy. It’s not usually the right choice, and you’re going to look for a professional to help because it is frustratingly hard to navigate alone.


The cost will be significant. There’s no getting around this. You can end up spending several thousand in fees alone. Since the fund has to be audited annually, that adds extra complications.


For the most part, you cannot use a superannuation fund to purchase a property you intend to use or live in yourself. You can’t rent it to your family or vacation in it. You can’t buy the property from someone associated with the fund or someone related to a member either.


Once again, I reiterate the need to have a professional on-hand. It’s essential for licensed accountants and financial planners to be available as you make decisions.


If the property you acquired falls short of expectations, you’re the one making up for the shortfall. This is going to be rough if you have no income beyond the super fund.