Under the super downsizer scheme, eligible individuals that are 65 years and older may be able to make a contribution into their superannuation of up to $300,000 from the proceeds of selling their family home. This scheme came into effect on 1 July 2018 as one of several measures announced in the May 2017 Federal Budget.
Benefits to downsizer contributions:
- It can provide a way to boost your super balance. For those who may not have saved enough to fund their retirement, tax-free downsizer contributions can be a good opportunity to top up their already existing savings.
- No work test applies. This test requires that taxpayers aged 65-74 who wish to make voluntary contributions must be employed for at least 40 hours within a 30-day period. By removing this requirement, older Australians who no longer work significant hours will still be able to add large sums to their super.
- There are no contribution caps, as concessional and non-concessional contribution caps do not apply.
- Downsizer contributions aren’t subject to the $1.6 million total super balance restriction.
- For couples, both spouses are able to take advantage of downsizer contribution. This means that up to $600,000 per couple may be contributed towards their super.
Other considerations to be aware of include:
- Contributions must be made within 90 days of receiving the proceeds of a sale.
- The sold property must have been owned for at least 10 years and must have been your main place of residence at some point in time.
- The property must be in Australia and excludes houseboats, caravans and mobile homes.
- Downsizer contributions are not tax-deductible.
More rules may apply to various situations, and contributions that do not meet the downsizer contribution eligibility requirements may incur penalties from the ATO. For further information and advice on other implications to the super downsizer scheme that may affect you, consult your professional advisor.