From 1 July 2018 older Australians (65 years or over) will be able to contribute proceeds from the sale of their home to their superannuation fund under “Contributing the proceeds of downsizing into superannuation’ measure that became law in December 2017.
Under this measure, older Australians will be able to make a once off downsizer contribution of up to $300,000. Both members of a couple will be able to take advantage of this measure for the same home, meaning $600,000 per couple can be contributed to their superannuation fund through the downsizing cap.
Current contribution restrictions for Australians aged 65 years and over with balances above $1.6 million, work test for 65-74 year olds and no contributions for those aged 75 and over will not apply to the contributions made under this new special downsizing cap.
However, to be eligible to make a downsizer contribution, you need to be 65 years and older; your home was a principal place of residence and owned for at least 10 years prior to the sale; the contract of sale is after 1 July 2018 and the contribution is received by your superannuation fund within 90 days of settlement.
It’s important to consider that a downsizer contribution of $300,000, or $600,000 for a couple will be transferred from a tax and Centrelink asset/income test exempt environment to a possibly taxed and Centrelink tested environments.
At the moment it appears that retirees eligible for the partial age pension will be worse off if they make downsizer contribution, while retires who are not qualifying for the age pension may benefit by being able to increase their tax free superannuation holdings.
If you do qualify and are considering this option, please contact myself at Paris Financial 03 8393 1000 to discuss your situation to ensure you are making the best financial decision for your future.
Tanya Hofbauer, Partner, Paris Financial