using super to buy a house

T

the chief

hi all,

i'm cash strapped at the moment but i want to buy a house as i am going backwards paying obscene rent at the moment. i've got a couple of investment places but not enough equity in any of them and i don't want to combine them as they are currently all separate.

can i access my government super, or can i create a smsf from my existing super and pull some out of that and buy a house and have it managed by my smsf.

my thought, is to buy a largish house near a university, rent 3 of the rooms out (and me living in another) and basically have that rent paying the majority of the mortgage on the house and giving me the cashflow that i need now - and also to stop me from paying the obscene rent that i am paying now.

basically the $2k rent i am paying per month now is preventing me from saving or moving ahead. besides my 2 investment places which are ticking over, i am cash poor.

I cannot move into my investment places as they are in another town.

so can i use my super which is int he 6 digits or create a smsf from my existing super to do what i want?


thanks
 
Hi gentle chief,

You can certainly establish a SMSF (self managed superannuation fund) which gives you full control over how you want to invest the money. You can purchase an investment property with your super fund.
 
the chief said:
But can I transfer a portion of my existing government based super into a SMSF?
Click to expand...

Possibly. It will depend on the fund. Also before you go down that road, check to make sure that this is the best course of action. Many govt. funds have healthy benefits not available to private funds. Additionally, you may have an insurance policy in the fund - see if that is transferrable.

You need specific advice before doing anything.
 
No.

I am assuming you have not met a condition of release.

You could be breaching a number of sections of the SIS Act

ie Section 65 - Giving financial Assistance to a member (will depend on the rent you pay)

and the bigger issues of

Sections 69 -82 being the inhouse assets rules.

the fund can not lease an asset to a related party when the asset is over 5% of the total assets of the fund.

and you alway have the sole purpose sections to consider as well.
 
the chief said:
Yes - i think it is a defined fund.

it is the government PSS fund.


thanks
Click to expand...

It depends on the fund itself. Some of them have a (lower) payout figure if you decide to withdraw early. Just be aware that the maximum LVRs for properties bought with super funds is lower than what you can get as an individual.
 
Aaron_C said:
Hi gentle chief,

You can certainly establish a SMSF (self managed superannuation fund) which gives you full control over how you want to invest the money. You can purchase an investment property with your super fund.
Click to expand...

But you can't purchase something that will be used for personal reasons. As mentioned - many industry supers don't let you roll out unless you leave (we're caught in one of those).

$500/wk rent is pretty high for one person ... can you move anywhere cheaper, or move to a share house, while you save your current deposit. Other option is to sell the IP's (if worthwhile), use the equity to buy your PPOR, and then use the equity in the PPOR to buy IP's - interest on the funds used for IP's is tax deductable regardless of source.
 
ok - it looks like transferring a portion of my existing super into a smsf so i can buy a place to live and to manage may not be possible.

so, like many people i assume, i am cash strapped and paying an obscene rent and this is preventing me from moving ahead. i have 2 investment places that i am reluctant to sell and do not have enough equity in either. they are ticking over and paying for themselves though.

i did have the thought of renting a house and subletting rooms to students while i stay in the house and manage it but again the rental market in my city, canberra, is so very hard and expensive to get into. plus, i would probably have to do the dodgy on the lease as i would be a single guy renting a house for say 600 a week and then the frequent inspections that occur will see the rooms filled up. honestly, the agents in canberra are a fickle bunch.

i am currently paying 2k a month rent for a fancy 2 bedroom place but i cannot get anyone else in to help me. this 2k a month could easily pay a mortgage but i cannot get the cash for a deposit because of this 2k a month. it is a catch 22 position.

so any ideas how i can get into my own house. are there any mortgage houses doing 95 or 98% mortgages these days? (but even if i were to do a 98% mortgage - then that means I still would need $30 or so to allow for stamy duty, mortgage insurance etc.

so am i stuck or is there any other way to escape the rental cycle.
 
the chief said:
so any ideas how i can get into my own house. are there any mortgage houses doing 95 or 98% mortgages these days? (but even if i were to do a 98% mortgage - then that means I still would need $30 or so to allow for stamy duty, mortgage insurance etc.
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Yes lenders still do 95% loans. But the key question is whether you can afford it or not.
 
my thought would be to get a mortgage for an investment place in canberra, with leases already in place, with the view of getting stamp duty and other expences back after tax time. i stay in my existing place in the meantime.

then move into it after 6 months or so, and i have one room and rent the other rooms out.

would that be frowned upon?
 
Perhaps you kick yourself for signing such an expensive lease then when it expires you move into some shared accommodation with another person.

You may be able to find a granny flat or share a house with someone which means you can start saving a deposit for a PPOR or another IP
 
My apologies for hijacking the thread, I just have one main question: I have only about $30k Super from working full time for 10 years, Am I able to somehow pull this and purchase a property with it?

I don't see Super doing anything for me because our 2016 retirement plan is our Super and more. I'd be 1000% better off buying another property with this money as we all know. Is this possible for me? If so, where do I sign up?

Thank you.
 
investor2009 said:
My apologies for hijacking the thread, I just have one main question: I have only about $30k Super from working full time for 10 years, Am I able to somehow pull this and purchase a property with it?

I don't see Super doing anything for me because our 2016 retirement plan is our Super and more. I'd be 1000% better off buying another property with this money as we all know. Is this possible for me? If so, where do I sign up?

Thank you.
Click to expand...

You could buy a very very cheap property with it by setting up a SMSF - realistically you may need a lot more in it.

Or wait till you meet a condition of release and then pull it out as a lump sum and buy.
 
Hmmm thanks Terry. I'm quite enthused about this because it really suits our goals to a T and I've always seen Super as such a crappy investment. I don't know where to begin with this.. How do I pull it out? I really don't know where to start. Is someone able to point me in the right general direction?
 
investor2009 said:
Hmmm thanks Terry. I'm quite enthused about this because it really suits our goals to a T and I've always seen Super as such a crappy investment. I don't know where to begin with this.. How do I pull it out? I really don't know where to start. Is someone able to point me in the right general direction?
Click to expand...

You would be required to wait until you meet a condition of release such as:
- becoming 55 or 60, or
- having a terminal illness

Super is not an investment, it is a structure. You have have your super funds invested in shares or property or both or a term deposit even.
 
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