- Published on 04 Jan 2023
- - What is Financial Planning?, Self Managed Superannuation
Downsizer now available to those of us over the age of 55
Downsizer superannuation contributions are a type of contribution that allows individuals aged 55 or over to make a contribution to their superannuation fund from the proceeds of the sale of the family home. This option was introduced by the Australian government on July 1, 2018, as a way to encourage older Australians to downsize and free up larger homes for younger families.
Under the downsizer contribution rules, individuals can make a one-off contribution of up to $300,000 per person, or $600,000 per couple, to their superannuation fund from the proceeds of selling a home that they have owned for at least 10 years. These contributions are in addition to the regular contributions limits and are not subject to the usual work test or the age test. This means that even if an individual is no longer working or is over age 65, they can still make downsizer contributions to their superannuation.
To be eligible for downsizer contributions, the following criteria must be met:
- The individual must be aged 55 or over at the time the contribution is made.
- The contribution must be made within 90 days of the exchange of contracts for the sale of the main residence.
- The individual must have owned the main residence for at least 10 years before the sale.
- The main residence must have been the individual's principal place of residence for at least the last 10 years.
- The contribution must be made from the proceeds of the sale of the main residence.
A couple of caveats!
There are some exclusions to the downsizer contribution rules. For example, contributions cannot be made from the sale of a company title, community title, or stratum title property. In addition, the main residence must be located in Australia, and the proceeds of the sale must be paid in Australian dollars.
Significant benefits for those who qualify
One of the main benefits of downsizer contributions is that they are not subject to the usual contribution caps, which means that individuals can make a larger contribution to their superannuation than they otherwise could. This can be particularly useful for those who have not been able to save as much for their retirement as they had hoped. Downsizer contributions can also help to boost the overall balance of an individual's superannuation fund, which can lead to a more comfortable retirement.
In addition to the tax benefits, downsizer contributions can also have other advantages. For example, downsizing to a smaller home can also reduce living costs, such as utility bills and maintenance expenses, which can help to stretch retirement savings further.
Overall, downsizer superannuation contributions can be a useful option for those who are over age 55 and looking to boost their retirement savings. However, it is important to carefully consider the pros and cons of making downsizer contributions and to seek financial advice before making any decisions. This will help to ensure that the contributions are made in a way that is tax-effective and meets the individual's retirement goals.
Why not take the next step and talk to a qualified financial planner specialising in Retirement planning?
LifeTime Financial Group are specialist (holding appropriate accreditations) advisors who are ideally positioned to assist you in planning and managing your retirement funds including self-managed super.
If you would like to discuss your Retirement plans or wider financial planning needs, why not call us today on 03 9596-7733? There is no cost or obligation for our initial conversation/meeting.
LifeTime Financial Group. A leading privately-owned Melbourne-based Financial Planning practice with no ties to any financial institution.