Older Australians who feel like they have not saved enough funds for retirement now have the opportunity to boost their superannuation by downsizing their home.
Boosting your super by downsizing your home
Older Australians who feel like they have not saved enough funds for retirement now have the opportunity to boost their superannuation by downsizing their home.
From 1 July 2018, individuals aged 65 and over are able to downsize their family home and place proceeds up to $300,000 per member (or $600,000 per couple) into their superannuation fund without breaching any of the current superannuation caps, work test and age test. This means even if an individual has a total superannuation balance of $1.6 million or more they will not be restrained from making an after-tax contribution with their house proceeds. This exemption also extends to the annual after-tax contribution limit which is currently $100,000. The individual also does not need to be working to make the contribution. Finally, there is no maximum age limit to be able to make a downsizer contribution.
To be eligible:
- you must be 65 years old or older at the time of making downsizer contribution
- the property that has been sold is required to be your (or spouse’s) principal place of residence at some point in time and you need to have owned it for more than 10 years
- the amount contributed is from the proceeds of selling your home where the contract of sale exchanged is on or after 1 July 2018
- the property sold excludes a caravan, houseboat or other mobile home
- you must make the downsizer contribution within 90 days of receiving sale proceeds
- you have not previously made a downsizer contribution to super
- you must submit a downsizer contribution form before or at the time of making the contribution
It is important to note that downsizer contributions are not tax deductible. Also, if you sell your main residence and make a downsizer contribution into your super, you are not required to buy a new home.
If you wish to take advantage of this strategy or have any questions regarding this topic, please contact our offices in Camden and Wollongong on (02) 4601 1000.
Product Disclaimer:
This is general information only. No investment advice has been provided to you. The information in this blog is general information only and has been prepared without taking into account your personal objectives, financial information and needs. You should consider any advice in this blog in light of your personal objectives, financial situation or needs before acting on it. You may wish to consult an accountant and or licensed financial adviser to do this. Hailston + Co assumes no responsibility for any actions you take independently, and without seeking professional advice from your accountant or licensed financial advisor.
