Can You Borrow Against Your Home Equity Loan To Super Top Up?


Can I use a home equity loan repurchase facility to make a pension contribution and then claim a tax deduction on the interest paid on the loan?

You can certainly borrow money to make super contributions, but the interest would not be tax deductible, as the purpose of the loan would not be to acquire an income producing asset.

Credit:Simon letch

The two main issues are whether your super fund could earn a higher return than the interest you would pay on the loan, and how long it takes before you reach your retention age, when you would have access to your loan. Great.

To put it simply, the closer you get to your retention age, the more feasible the idea you come up with.

I am 50 years old and my partner is 54 years old. We expect her to retire at 65 and I retire or at least go part-time at 62. We’re both working hard to build our super, but our financial advisor suggested that I focus on building my wife’s super balance because that way we can access the funds sooner. This makes sense, but I’m concerned about the effect on the makeup of my balance. I’m aiming for $ 1.4 million. Would this be affected by transferring a portion of my Super each year to my partner’s fund?

It’s great that you appreciate the power of composition, and I agree with your advisor to increase your partner’s super balance. His ability to get into the super four years before you could be invaluable when you want to retire.

Remember that compounding works on the total balance, so as long as your two super funds offer the same rate of return, there is nothing to lose by creating your partner’s super at your expense.

The same overall balance should work for you, as long as your relationship is secure.

My wife and I are in negotiations to buy a retirement villa. If we can’t sell our apartment for a reasonable price, would it be reasonable to use some of our super, as well as some money, to buy the villa? We kept the apartment and rented it out. I am 75 years old and my wife 67 years old.


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