Downsizing contributions into super
Also from 1 July 2018, the government will introduce the ‘Contributing the proceeds of downsizing into superannuation’ measure.
The name can be quite a mouthful, but it has been designed for people who are at the other end of the ‘homeowner’ cycle. Members who are 65 years or older and meet the eligibility requirements, may be able to make a ‘downsizer’ contribution of up to $300,000 into their super account from the proceeds of selling their home.
The measure applies to the sale of a main residence, which has been owned for 10 years or more, where the exchange of contracts for the sale occurs on or after 1 July 2018.
What you need to know
- The maximum amount of the eligible contribution is $300,000 per person, so the amount is $600,000 combined for a couple ($300,000 into each account)
- You can only make downsizing contributions for the sale of one home. You can’t access it again for the sale of a second home
- The proceeds from the sale must be transferred to your super account within 90 days from the date of settlement
- If you sell your home and choose to make a downsizer contribution (subject to eligibility), there is no requirement for you to purchase another home
- The lifetime super cap of $1.6 million that can be transferred into a tax-free super income stream still applies, meaning any amount contributed under this measure will be counted towards the total permitted under the cap.
This measure can be helpful because the existing age, work test and contribution cap rules that restrict contributions to super, particularly for those aged 65 or over, won’t apply under the downsizing measure.
However, you should keep in mind that your super balance is assessed for eligibility for the government age pension, while the value of a family home is not.
For further information on this measure you can visit the Australian Tax Office website.