The children have moved out and you are thinking of selling the family home. And the proceeds from selling the family home can potentially boost your superannuation if you meet the eligibility requirements for a downsizer contribution. The maximum downsizer contribution is $300,000 or the sales proceeds of the house, whichever is the lesser.
Eligibility Criteria
To be eligible to make a downsizer contribution, each of the following criteria must be satisfied.
- You are aged over 65 (this changes to 60 years from 1 July 2022) when you make the contribution.
- The contribution is from the sale of an eligible property in Australia.
- The property was owned by you or your spouse for at least 10 years.
- The proceeds from the sale of the home are fully or partially exempt from capital gains tax under the main residence exemption.
- The downsizer contribution is made within 90 days of settlement.
- You need to provide you superannuation fund with the completed relevant ATO form.
- You have not made a previous downsizer contribution.
Benefits
Benefits
The potential advantages of making a downsizer contribution will depend on individual circumstances. Following is a list of potential benefits.
- Downsizer contributions provide a way to top up your super balance when you may not have otherwise been eligible to make superannuation contributions.
- There is no work test or upper age limits to consider.
- The downsizer contribution is excluded from annual concessional and non-concessional caps. And downsizer contributions can be made in addition to concessional and non-concessional contributions.
- Downsizer contributions can be made irrespective of your total superannuation balance.
- It may be called a downsizer contribution, but there is no requirement to buy a new home when you sell the old one.
- Both members of a couple can make a downsizer contribution. This means up to $600,000 a couple can be contributed on the assumption that the sales proceeds from the house are greater than $600,000.
Other Things to Consider
The following factors need to be considered when you are thinking about making a downsizer contribution:
- The contribution can potentially impact eligibility for the Age Pension. Your superannuation balance is assessed for your eligibility for the government age pension, whereas the value of your family home is not.
- The downsizer contribution will count towards your transfer balance cap, with the maximum amount that can be transferred into a tax-free superannuation income stream being $1.7m.
- You should consider seeking financial advice to understand how the downsizer contribution will impact your current situation.
Everyone’s circumstances are different. We recommend you speak to an Accru advisor if you are considering making a downsizer contribution.
Being general in nature, and not considering individual financial circumstances, the information in this article is not intended to be relied upon for specific professional advice
