KiwiSaver for First Home Buyers: What you Need to Know
Your KiwiSaver funds can be a vital piece of the first home deposit puzzle, says David Copson, head of growth at Booster.
7 June 2023
It sounds counter-intuitive, but one of the most satisfying parts of our work at Booster is helping clients take their money out of our KiwiSaver funds to buy their first home.
Over the last five years in excess of 100,000 New Zealanders have withdrawn their KiwiSaver funds to buy their first home, according to MBIE data. We know most Kiwis understand this money is available to them, so let’s take a look at some of the less well-known aspects of KiwiSaver for first home buyers.
Can you use KiwiSaver if you’ve owned a property in the past?
If you have previously owned a home, here or overseas, you are not usually eligible to use your KiwiSaver to buy another property. But in some cases you may have a second chance.
To qualify you must not currently own any property, you must not have previously drawn down your KiwiSaver for a house deposit, and you must be in a financial position that’s comparable to a typical first home buyer.
That last requirement can be the trickiest; the threshold being what you can own yourself, which is quite low. If you own assets that could cover the 20 per cent deposit – which might be a business, shares or any other investments – you may also not qualify. Talk to your provider and they’ll be able to give you advice based on your situation.
How does KiwiSaver work for living or buying overseas?
If you move overseas permanently you can withdraw your KiwiSaver savings, excluding the government contributions. You will then have the money available to spend or invest as you wish.
You cannot make a first home withdrawal from your KiwiSaver account to buy a property outside New Zealand, but there are different rules for Australia. If you move across the ditch you can transfer your KiwiSaver funds to an Australian superannuation scheme or leave it in NZ. If you transfer it, you can use the funds for the Australian First Home Super Saver scheme if you meet certain requirements. Visit the Australian Tax Office website for more information.
Can you use KiwiSaver to buy an investment property?
Don’t listen to the good old Kiwi BBQ talk where someone says, “I used my KiwiSaver to buy a rental.” Your KiwiSaver funds are only available for purchasing a first home, and you must have the intention to live in the house. If you use the HomeStart Grant you must live in the house for at least six months. This is monitored by Housing New Zealand.
Can I use my KiwiSaver FUNDS to buy a house with my partner?
Each person’s eligibility is separate – being able to withdraw your own KiwiSaver funds to buy a first home is not impacted by your partner’s situation.
If both you and your partner haven’t used your KiwiSaver funds before and you're both eligible, you can pool your funds and help boost your buying power. If only one of you is eligible, only that person can withdraw their funds. If you have both already used KiwiSaver to buy a first house, neither of you can withdraw funds a second time, unless special circumstances apply.
Can you use KiwiSaver to buy a section?
You can use your KiwiSaver funds to buy land, but you must have the intention to build a first home on it. That means you’ll usually need a plan to show that you’re going to build, but there’s no time limit on the project.
You can’t buy land and simply hold it, and you can't use your KiwiSaver funds to fund a first-home build on a piece of land you already own.
What about KiwiSaver after you’ve bought a house?
Don’t forget about your retirement once you’ve bought your first home. When you are saving for a house you’ll often allocate your money to a conservative fund, but it’s not a set-and-forget scenario. Have a meeting with your adviser as soon as possible after you withdraw your funds so you can get it in the right fund for your retirement plans and get the balance building up again.
This article provides general commentary only and is not, and is not intended to be, financial advice as defined in the Financial Markets Conduct Act 2013. It does not fully consider your personal financial situation or goals, does not recommend a particular investment product, and is not a substitute for obtaining financial advice from a Financial Advice Provider.
Booster Investment Management Limited is the issuer of the Booster KiwiSaver Scheme. Product Disclosure Statements are available at www.booster.co.nz
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