Downsizer contributions - a super opportunity!

Are you over 65, or do you know someone over 65 that would welcome the opportunity to top up their super?

If you are 65 or older, and selling your home, you may wish to consider accessing the downsizing contributions measure that was announced by the Government as part of the 2017-18 Budget.

Depending on your individual circumstances, this potentially creates a great opportunity to get more funds into the tax effective superannuation environment.

About the Downsizer Measure

Effective 1 July 2018, if you are 65 years or older and meet the eligibility requirements, you may be able to choose to make a contribution into your superannuation fund (known as a downsizer contribution) of up to $300,000 from the proceeds of selling your home.

Some key features of the downsizer contribution are as follows:

  • The contribution will not count towards your annual super contribution caps (currently $25,000 for concessional and $100,000 for non-concessional)
  • There is only a minimum age limit, being 65 - there is no maximum age limit and no work test to be satisfied
  • The contribution can still be made even if you have a total super balance greater than $1.6m
  • The contribution of up to $300,000 is “per individual”, meaning a couple could potentially contribute up to $600,000 subject to meeting the eligibility criteria (the total contribution to super can’t exceed the proceeds from sale)
  • Despite the term “downsizer”, there is actually no requirement to downsize. For example, if you sell your 3 bedroom home for $700,000 and buy a new 4 bedroom home for $900,000, you can still make a contribution to super under the downsizer contribution measure
  • Further to the above, there is no requirement to purchase another home under the downsizer contribution measure.

Eligibility for the Downsizer Measure

In order to be eligible to make a downsizer contribution you will need to meet all of the following criteria:

  • You are 65 years old or older at the time you make a downsizer contribution
  • The amount being contributed is from the proceeds of selling your home where the contract of sale exchanged after 1 July 2018
  • Your home was owned by you or your spouse for 10 years or more prior to the sale
  • Your home is in Australia and is not a caravan, houseboat or other mobile home
  • The sale of the home is either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or if the home was acquired prior to the introduction of CGT on 20 Sep 1985, would be entitled to such an exemption if the home was a CGT asset
  • You make a downsizer contribution within 90 days of receiving the proceeds of sale
  • You have not previously made a downsizer contribution to your super from the sale of another home

If you would like further information in relation to the downsizer contribution measure, or would like to discuss, please don’t hesitate call us on 07 3808 9990 or book a consultation.

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