Can You Use Super to Buy Property?

Can You Use Super to Buy Property? What every Inner West mum should know

If you’re juggling work, kids, rising costs and the dream of owning a home anywhere near Sydney, you’ve probably wondered at some point: Could my super be doing more to help?

There’s been a lot of talk lately about buying property through super or using super to fast-track a home deposit. And while both ideas have merit, they’re also wrapped in rules, compliance and some very strict “don’ts.”

Yes, you can use super to buy property – but not your own home, and not that dreamy coastal weekender. And depending on your situation, there’s a second super-related option that may be far more accessible.

🏡 Option 1: Buying Through an SMSF

If you’re thinking of buying property through a SMSF, the first thing to understand is the ATO’s sole purpose test. Translation? The property must exist only to support your superannuation investments – not your lifestyle today.

What this means in practice:

You and your relatives cannot:

live in the property
stay in it
holiday in it
buy it from (or sell it to) a related party

The only exception is commercial property, which can be leased to a related business under strict conditions.

To break it down simply, financial adviser Diana Ramirez from Franca Finance often tells clients: “You can own it, but you can’t use it — not until retirement.“

Borrowing inside super

If your SMSF is borrowing to buy property, the rules tighten further. The fund must use a special loan called a limited recourse borrowing arrangement (LRBA). This structure limits the lender’s claim to the property itself if the fund defaults.

What you need to know:

Higher deposits: typically 20–30% for residential, more for commercial.
Strict servicing: only rental income and super contributions can be counted.
Bare trust: The property must sit in a separate trust until the loan is fully repaid.
Fewer lenders: only a handful of banks offer SMSF loans, and those that do have a very specific criteria.

This is where mortgage brokers like Rebecca Morgan at My Mortgage Concierge step in, working alongside accountants and licensed financial advisers who specialise in SMSFs to make sure the lending, compliance and investment strategy all line up.

The financial advice side

Diana explains that making SMSF property work usually requires a combined SMSF balance of around $250,000. This isn’t an arbitrary number, it ensures the fund has enough money to:

Cover set up and accounting costs
Manage loan repayments
Pay ongoing property expenses
Stay compliant without running short on cash

Your SMSF also needs:

a trust deed that allows property investment
an investment strategy that justifies the purchase
a plan for diversification (so you’re not putting everything into one big, illiquid asset)

Diana is clear: SMSF property can be a powerful strategy for the right person – but it’s not simple, and it’s never a DIY project.

🏡 Option 2: Boosting a Deposit Through the FHSSS

If an SMSF feels too complex – or simply not relevant to where you are in life – there is another way super can help you get into the property market. And it’s one that many first-home buyers in Sydney overlook.

The First Home Super Saver Scheme (FHSSS) allows first home buyers to make voluntary contributions into their super fund and later withdraw them (within government limits) to boost their deposit. This doesn’t mean buying inside super; it’s about using super as a tax-effective savings vehicle before you buy your home in your own name.

Financial adviser Diana Ramirez explains it like this: ‘This is one of the few times the tax system gives you a leg-up — use it if you can.’”

Why families and first-home buyers like this option

Because those extra contributions you make into super are usually taxed at just 15%, most people save more compared to putting the same money into a regular savings account.

For someone earning $90,000, contributing $12,000 could leave them roughly $3,000 better off in tax savings for that year.

Over a few years, that difference can really add up and give your deposit a big boost.

🏡 Common Mistakes to Avoid

1. Confusing SMSF property rules with FHSSS rules.

They’re completely separate pathways. An SMSF lets you invest in property (with heavy restrictions). The FHSSS helps you save for a deposit. Knowing which one applies to your situation is half the battle.

Trying to buy a home you (or family) intend to live in through an SMSF

The ATO doesn’t allow it — not for you, your kids, or any relatives.

3. Assuming topping up your retail/industry super fund gives you property access.

You only get deposit benefits through FHSSS-specific voluntary contributions.

4. Over-leveraging an SMSF so the fund can’t meet its obligations.

SMSFs need cash buffers for expenses, audits and repairs. Too much debt risks non-compliance

Thinking an SMSF is a shortcut

It’s a long-term, highly regulated investment structure — not a quick hack into the property market.

The Bottom Line

Using your super to buy property is possible — but it’s not simple, and it’s not for everyone. For some Australians, an SMSF can be a powerful long-term strategy. For others, the FHSSS offers a much easier way to build a first-home deposit without the complexity.

What matters most is making sure the pathway you choose:

fits your stage of life
won’t leave you short on cash
aligns with your long-term goals
is supported by proper financial and tax advice

Start with education, ask the right questions, and get help from professionals who understand both lending rules and superannuation rules.

Rebecca Morgan — My Mortgage Concierge

Rebecca works with clients and their advisers to ensure the lending side of SMSF property purchases is rock solid from the start. She coordinates with accountants and financial planners so every step meets the legal, lending, and retirement strategy requirements.

📞 Call Rebecca on 02 8014 4443 or visit mymortgageconcierge.com.au

Diana Ramirez — Franca Finance

At Franca Finance, we help busy professionals in their 40s, to 60s grow and protect their wealth with confidence. As a Principal & Senior Financial Adviser, I work closely with clients to make informed decisions about superannuation, investments, insurance, and retirement planning. Property often forms part of the bigger picture, and my role is to ensure that any strategy — whether buying inside super, building wealth outside super, or preparing for retirement — aligns with your long-term goals. My mission is simple: to give you clarity, confidence, and peace of mind with your finances.

Find out more and get in touch by visiting francafinance.com