Commencing 1 July 2018, eligible persons aged 65 years or over who after 1 July, 2018, enter into a contract to sell a property they have owned for a minimum of 10 years will be entitled to contribute an amount of up to $300,000 from the sale proceeds into their superannuation accounts. You may make multiple downsizer contributions from a single sale but the total of such contributions must not exceed $300,000.00. This amount is over and above existing contribution caps and restrictions, including the current total super balance cap of $1.6 million. Both members of a couple will be able to take advantage of this, and would have the potential to contribute up to $600,000 from the proceeds of the sale into their super. If you are an older Australia and looking to downsize this would be of great benefit to you, but you must meet the eligibility criteria and should aware of the following:
- You must be 65 years or over;
- The date of the contract must be on or after 1 July 2018;
- Work test rules do not apply, i.e. you can be retired and still make a downsizer contribution;
- Downsizer contributions 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 to purchase another home;
- The house sold must be in Australia and cannot be a caravan, houseboat, or other mobile home;
- Proceeds from the sale of the house (capital gain or loss) are exempt or partially exempt from Capital Gains Tax (CGT);
- Contributions to your super from the downsizing sale must be deposited into your super account within 90 days of receiving the proceeds. You may be able to request a longer period for making a downsizer contribution in some circumstances, however, an extension of time will not be granted to allow the age requirement to be met. An extension of time should be requested before the 90-day period from the date of settlement has expired;
- Individuals can only take advantage of the downsizer super option once; and
- A Downsizer Contribution into Super form must be completed and lodged with your super fund at the time the funds are contributed. If you make multiple downsizer contributions or contributions to different super funds, you must provide a form for each contribution.
In cases where the ATO finds that downsizer contributions do not comply with the rules, penalties may apply. If you are considering downsizing you should contact your super fund for further information. Further information is also available at the ATO’s website: https://www.ato.gov.au/Individuals/Super/Super-housing-measures/Downsizing-contributions-into-superannuation Important Disclaimer: The content of this publication is general in nature and for reference purposes only. It is current at the date of publication. It does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.