There comes a time for many people where the family home is now too large for a variety of reasons and “downsizing” is a great idea. One of the announcements in this year’s Budget might make this even more appealing for some.
The 2017 Federal Budget introduced legislation to implement “downsizer contributions” which allow you to contribute to super when downsizing a home. The intention is to encourage retirees to move out of large houses freeing up the housing stock and presumably easing the housing affordability problem. (Note that this legislation has passed both houses.)
It will enable a person who is 65 or older to make a once-only contribution of up to $300,000 to super from the sale proceeds of their main residence.
A number of conditions must be satisfied in order to take advantage of this change:
The contribution must come from the proceeds of the sale of a residence owned by you and/or your spouse
The residence must have been held for 10 years and qualify fully or partially for the main residence exemption
The residence must be located in Australia and not be a mobile home, caravan or houseboat
The person making the contribution must be aged 65 or over at the time of the contribution (no work test requirements or contribution caps apply)
The property sale must occur after 1 July 2018 (signing of contract not settlement)
The contribution must be made within 90 days of the change in ownership
Some things to consider
There may be implications for both Centrelink and Aged Care purposes of making additional contributions to superannuation. Similarly, if you are considering taking advantage of this option, signing of contracts must occur after 1 July 2018.
Please contact us to discuss all the implications before committing to a downsizer contribution.