Downsizer Contributions

From 1 July 2018, Australians aged 65 years of age or older are able to make a $300,000 “downsizer contribution” into their superannuation fund, per person, from the sale proceeds of their family home.

This was a 2017-18 budget measure as part of the package of reforms to reduce pressure on housing affordability in Australia and became law on 13 December 2017.

The downsizer contribution is not a non-concessional contribution and will not count toward your contribution caps. The downsizer contribution can still be made even if you have a total super balance greater than $1.6m. It also only affects your total super balance when your balance is re-calculated at the 30th June to include all of your other contributions.

If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home.

To make a downsizer contribution to superannuation, you need to:

  • Be 65 years old or older at the time you make a downsizer contribution
  • Your contribution is from the proceeds of selling your home
  • You haven’t accessed the downsizer contribution for another property
  • The contract date is on or after 1 July 2018
  • Your home was owned by you or your spouse for 10 years or more prior to sale
  • Your home is in Australia and is not a caravan, houseboat or other mobile home
  • The proceeds are either fully or partially exempt from capital gains tax under the main residence exemption
  • You have provided your super fund with a ‘Downsizer contribution into super’ form either at time of contract or before making your downsizer contribution
  • You make your downsizer contribution within 90 of receiving the proceeds of sale
  • The contribution can’t be greater than the sale proceeds of your house

A few considerations:

  • It can be an opportunity to boost your super and you don’t actually have to downsize… you could buy a more expensive or larger house
  • You don’t need to buy a new home
  • There is no age limit and you don’t need to meet the work test
  • Contributions will count toward age pension tests – income and assets tests
  • Agent fees, stamp duty, advertising, moving costs, etc can be substantial and should be considered prior to making any decisions on using the downsizing contribution measure
The above information is general information only and should not be considered financial advice. We don’t know you or your circumstance and strongly suggest seeking appropriate, accredited financial advice before making any decision. This is a guide only.

Contact

Suite 13, 241 Blackburn Road
Mount Waverley, Victoria, Australia

Phone: +61 3 9802 2533
Fax: +61 3 9802 0590
Email: mail@rogersonkenny.com.au
Postal Address: PO Box 323, Mount Waverley, Victoria, Australia, 3149
ABN: 29 545 604 022