Young Australians struggling to break into the property market due to soaring prices and the high cost of living can use their superannuation to get a foothold – but thanks to strict rules on using your retirement funds, there is one very important catch.
There are a range of options when determining how to manage super. A self-managed super fund (SMSF) has grown in popularity, providing individuals with the flexibility to determine when and where their super will be invested.
Here’s the trick: An SMSF allows the purchase of a real estate investment property.
The catch: You can’t live in the purchased house. It is solely an investment property.
There’s one particular trick young Aussies should be aware of if they need help with purchasing an investment property
In the past, many opted to invest in shares. However, due to the growth of property markets in the past ten years, the decision to invest in property has become a no-brainer.
The SMSF fund can have between one and four members whereby members can make their own collective decisions about where to invest their superannuation.
It is important to seek guidance of a financial adviser when venturing through SMSF. This is because it is a tightly regulated process and you must be aware of your responsibilities to ensure your financial security and safety.
You don’t need to have saved the full value of the property to buy an investment property with SMSF – but in another catch, you can’t use all of your superannuation to invest in property. The restrictions ensure you must retain a buffer for your own benefit.

A self-managed super fund (SMSF) allows you to buy a property, but the catch is that you can’t live in the property

The process is tightly regulated and it is important that individuals seek guidance when opting for a SMSF
Metropole property strategists CEO Michael Yardney says you get the benefit of leverage and gearing.
‘If you had $300,000 balance in your super, you could own $300,000 worth of a managed fund or BHPO shares, or you could use $200,000 of that money as a deposit and borrow another $400,000 to buy a $600,000 apartment,’ Mr Yardney said.
There are other ways super can be used to get into the property market.
In 2017, the Federal Government implemented the First Home Super Saver Scheme (FHSS) to try and help first home buyers get into the market. FHSS encourages first home buyers to save for a deposit by making voluntary concessional and non-concessional contributions.
The FHSS scheme can be restrictive as you potentially have to wait two years to get any benefit. This is because the FHSS scheme only allows a maximum contribution of $30,000 in two years.
It is of imperative importance that you discuss all options with a professional financial adviser to ensure that you are making the best decision and that you are managing the rules and restrictions in a responsible manner.

Young Aussies are encouraged to reach out to a professional financial adviser to ensure they’re making the right decisions