Read time: 3 minutes.
PROBLEM: Does Inheriting Property Block Your KiwiSaver Use?
You've inherited property, and your name is now on the title. You're planning to buy your first home with your partner but face a significant hurdle: owning any interest in land disqualifies you from using your KiwiSaver for the purchase: KiwiSaver Act 2006 No 40 (as at 01 July 2024), Public Act - New Zealand Legislation - Schedule 1, Rule 8
RISK: Missing Out on KiwiSaver Funds
Without addressing this issue, you can't access your KiwiSaver savings to buy your new home, as the current rules prohibit usage if you're listed on any property title in New Zealand.
CONTEXT: What Are Your Options?
Your main choices are:
• Option 1: Leave your KiwiSaver untouched until you retire at age 65.
• Option 2: Remove your name from the inherited property's title to regain eligibility.
SOLUTION: Steps to Unlock Your KiwiSaver - How to Complete Option 2
Step 1: Remove Your Name from the Property Title
Sell your inherited property or transfer your share to a family member. Make sure your name is no longer on any property title before applying to use your KiwiSaver.
Step 2: Apply to Kāinga Ora for Eligibility
After you're off the title, apply to Kāinga Ora. They will assess your eligibility to use your KiwiSaver as a first-home buyer by comparing your net assets to regional asset caps.
Realisable Asset Caps
Realisable Asset Caps and House Price Caps
As of 15 May 2023, the caps for selected regions are:
- Auckland:
- House Price Cap: $875,000
- Realisable Asset Cap: $175,000
- Hamilton Urban Area:
- House Price Cap: $650,000
- Realisable Asset Cap: $130,000
- Wellington Urban Area:
- House Price Cap: $750,000
- Realisable Asset Cap: $150,000
- Christchurch Urban Area:
- House Price Cap: $575,000
- Realisable Asset Cap: $115,000
- Queenstown-Lakes District:
- House Price Cap: $875,000
- Realisable Asset Cap: $175,000
Step 3: Apply as a Previous Home Owner
Since you've owned property before (even through inheritance), you must apply as a previous home owner. Kāinga Ora will determine if you're in the same financial position as a first-home buyer.
Eligibility Criteria for Previous Home Owners
To qualify, you need to:
- Not Have Used KiwiSaver Before: You haven't previously withdrawn KiwiSaver funds to purchase a home.
- Be a KiwiSaver Member for 3+ Years: You've been contributing to KiwiSaver for at least three years.
- Own No Property Now: You don't currently own any interest in property (excluding Māori land).
- Meet Asset Limits: Your realisable assets are less than 20% of the house price cap for an existing property in your area.
Examples of Realisable Assets:
- Cash in bank accounts
- Stocks, shares, and bonds
- Investments with financial institutions
- Building society shares
- Deposits held by real estate agents or solicitors
- Boats or caravans over $5,000 in value
- Extra vehicles not used for daily transport
- Other assets over $5,000 in value
Next Steps: Obtain Approval
If you meet the criteria, Kāinga Ora will issue a letter confirming your eligibility to use your KiwiSaver for the home purchase.
Proceed with Your Purchase
With approval, you can move forward with buying your home, following the standard settlement procedures.
Bonus Tip: Timing the Probate Process
If possible, delay finalizing probate until after you've purchased your first home. This allows you to use your KiwiSaver before your name appears on any property title. While not always possible, it can be beneficial if feasible.
TL; DR
- To use your KiwiSaver after inheriting property, first remove your name from the property title. This will require a formal sale and a transfer on LINZ.
- Then apply to Kāinga Ora as a previous home owner to confirm eligibility: KiwiSaver-first-home-withdarawl-Form.pdf
- If you are going to buy a property that is higher than the asset cap e.g. $875,000 (Auckland) then do not bother with this process as you will not be able to apply to Kainga Ora!
