Trying to save a house deposit in Australia right now is hard enough without also having to untangle superannuation rules. So let’s clear something up straight away, because it trips a lot of people up.
There are two very different things that fall under the banner of “using your super to buy a home.” One is a genuine, government-backed way for everyday first home buyers to save a deposit through their super, and it’s still very much alive. The other is a niche strategy used mostly by property investors and self-managed super fund (SMSF) trustees to borrow inside their fund to buy investment property, and that one is being shut down. If you’ve seen news about a “super borrowing ban” and started to worry, it’s almost certainly the second one, not the first.
Here’s how to tell the difference, and what it actually means for you.
The scheme most people mean: the First Home Super Saver Scheme (FHSSS)
If you’re a first home buyer wondering whether you can use super to help buy the place you’ll actually live in, the tool you’re probably thinking of is the First Home Super Saver Scheme. It’s been running since 2017, and none of the recent changes affect it.
Here’s the gist:
- You make voluntary contributions to your super, either through salary sacrifice or extra personal contributions, separate from your compulsory employer contributions.
- You can contribute up to $15,000 per financial year, capped at $50,000 in total over your lifetime.
- Because voluntary concessional contributions are taxed at just 15%, rather than your marginal income tax rate, your money can effectively grow faster inside super than it would in a regular savings account.
- When you’re ready to buy, you apply to the ATO for a determination, then withdraw your eligible contributions plus associated earnings, minus a small offset, to put toward your deposit.
- Couples, siblings or friends buying together can each use their own $50,000, potentially stacking up to around $100,000 combined.
To qualify, you generally need to be at least 18, never have owned property in Australia before (with some hardship exceptions), and intend to actually live in the home you buy. Timing matters too. You need to get your ATO determination sorted before you sign a contract, so it pays to plan ahead rather than trying to use it at the last minute.
It’s not a magic bullet. For most buyers it accelerates a deposit rather than fully funding one. But it remains one of the more underused tools available to Australians trying to get into the market.
The scheme that’s actually being banned: SMSF property borrowing
The recent headlines about a “super borrowing ban,” including reports of anger among landlords, are about something else entirely: limited recourse borrowing arrangements (LRBAs) inside self-managed super funds.
For nearly two decades, trustees of SMSFs have been able to borrow money within their fund to buy property, with the loan secured only against that specific asset, protecting the rest of the fund if things went wrong. It’s a strategy used almost exclusively by SMSF trustees, often to build a property portfolio for retirement, not to buy a home to live in. SMSF-owned property generally can’t be lived in by fund members while it’s held in the fund.
As part of a deal between Labor and the Greens to push through broader changes to negative gearing and capital gains tax, this borrowing arrangement is being scrapped. According to the reporting:
- The ban closes what was seen as a loophole letting SMSF property investors sidestep some of the impact of the new CGT changes.
- ATO data shows SMSFs held around $75 billion in assets under these arrangements, backed by $28.9 billion in debt, a relatively small slice of the overall market, given Australia does well over a million property transactions each year.
- Housing Minister Clare O’Neil pointed out that in 2004, only around 4,300 residential transactions relied on this kind of SMSF borrowing.
- Unsurprisingly, the industry, isn’t happy, with some high-profile property investors calling the change “insanity.”
- Industry bodies like the SMSF Association argue LRBAs have “operated effectively” for years and that the real risks lie more with aggressive marketing of unsuitable property spruiking than with the borrowing structure itself.
If you don’t have an SMSF and weren’t planning to borrow inside one to buy an investment property, this change has essentially no impact on you.
So, what does this actually mean for your home-buying plans?
| First Home Super Saver Scheme | SMSF Property Borrowing (LRBA) | |
| Who it’s for | First home buyers saving a deposit | SMSF trustees buying investment property |
| Status | Still available, unchanged | Being phased out |
| Purpose | Live in the home you buy | Grow a retirement investment portfolio |
| Impact of the news | None | Ends the ability to set up new arrangements |
If you’re an everyday Australian trying to buy a home to live in, the FHSSS is still there, still works the same way, and is worth a proper look, especially if you’re not yet maximising your voluntary super contributions. If you were planning to use an SMSF to borrow for an investment property, it’s worth talking to your accountant or financial adviser soon, since the window to set up a new arrangement before the ban takes effect is closing.
Worth checking before you act
Rules around contribution caps, eligibility and timing can shift, and getting the sequencing wrong, like signing a contract before your ATO determination comes through, can cost you the benefit entirely. This article is general information, not financial or tax advice. It’s worth speaking with a licensed financial adviser or the ATO directly about your specific situation before making any decisions.