Over 65 and Thinking of Downsizing? Potential new superannuation benefits
From 1 July 2018, if you meet the eligibility requirements, you may be able to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.
To be eligible to make a downsizer contribution of up to $300,000 into your super:
- You will need to be 65 or older at the time of the contribution
- Your house sale contract must have exchanged on or after 1 July 2018
- You must make your downsizer contribution within 90 days of selling your home (unless the ATO grants you an extension on this time limit)
- You can only make a contribution from the sale of one home (ie you cannot previously have used the downsizer contribution scheme). However you can make multiple contributions from the sale of that one home – but all contributions must be made within 90 days of the sale completing and cannot exceed the cap of $300,000 per person
- You or your spouse must have owned your home for 10 years or more before selling it
- Your home must be in Australia and you must apply the main residence exemption for CGT to the sale of the home (unless you acquired the home prior to 20 September 1985)
- You must submit the downsizer contribution form to your super fund either before or at the same time as making your contribution
- The contribution cannot be greater than the total proceeds from the sale of your home
If you choose to make a downsizer contribution then:
- If you have a spouse, then each of you may be able to make your own contribution of up to $300,000
- A downsizer contribution will not count towards your concessional contributions cap
- A downsizer contribution can be made even if your superannuation balance is greater than $1.6 million
- However a downsizer contribution will count towards your transfer balance cap of $1.6 million (nb the transfer balance cap applies when you move your super savings into the retirement phase)
You should carefully consider whether a downsizer contribution is suitable for you, as they are not tax deductible and will be taken into account for determining eligibility for the age pension.
If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home, however purchasing a new home is also permitted.