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