Downsizer Super Contributions

Once your kids have flown the nest, you may find yourself wanting to downsize by selling the family home.

Downsizer superannuation contributions was a measure introduced since 1 July 2018 to allow people to use the proceeds from the sale of the family home to make an extra contribution to superannuation without the limits and rules which generally apply (for example you do not need to be working to make a downsizer contribution).  Of course there are other rules and regulations that apply to these contributions.

Currently, Australians aged 65 years and over (in the May 2021 Federal Budget it was announced that, from 1 July 2022, the age will reduce from 65 to 60 – has not yet been passed as law) are able to make a non-concessional contribution of up to $300,000 from the sale proceeds from the sale of their family home.

The property must have been owned for at least 10 years and must be eligible for the main residence exemption for capital gains tax.  Unfortunately it cannot be a caravan, houseboat or other mobile home.

The $300,000 is a per person amount.  Any contributions made using the downsizing rules, do not count towards your concessional or non-concessional contributions caps.   Any downsizer contributions cannot be greater than the total proceeds from the sale of the home.  You can take advantage of the downsizer contributions once in relation to one home.  The downsizer contribution must be made within 90 days of receiving the sale proceeds.

There is still opportunity for contribution if the home has been owned in one partner’s name and there is no requirement to actually buy a downsized house (or even an upsized house)  to replace the house you are selling.

There maybe impacts on Centrelink assessment tests and also on eligibility for residential aged care and home care services as the contributions will form part of your super balance.

Obviously this is a very general overview to raise awareness of the downsizer contribution measures. It is imperative that specific advice be sought before you sell your house and make the contribution as the costs of getting it wrong can be substantial. With any information, we have not considered your personal situation in this article nor taken into account your individual, financial situations and needs. Therefore, before proceeding you should speak to your tax professional &/or your financial adviser.

If you wish to discuss how the above affects you or if you have any other questions, please do not hesitate to contact our office on 1300 620 345.