Super Concessions for those who are selling their home - The Downsizer Concession

May 9,  2017 saw the Federal Government make a significant announcement regarding Super Concessions for those who are selling their home post 01/07/2018.

On the condition that;

  • you have owned your home (and it is considered your principal residence) for more than 10 years and
  • are over the age of 65

From July 1, 2018, you may be eligible to contribute some of the proceeds to your Superannuation fund. This also applies to your spouse effectively meaning you can potentially add a total of $600,000 to your respective Superannuation accounts from the proceeds of the sale of the family home.

Superannuation is always complicated and this rule is also quite complicated. Here is a summary of the rules as we understand them.

Most importantly, you will not be subject to the usual rules regarding existing non-concessional contribution caps or age based restrictions. The benefit of this allowance is it allows you to further boost your Superannuation and at the same time, take advantage of the concessional tax rates associated with Superannuation in pension phase.

The Transfer Balance Cap rule introduced in July 2017 will continue to apply. This means your total Superannuation benefit in pension phase cannot exceed a total of $1,600,000 at commencement of the pension income stream. The Age Pension means test will continue to apply.

Maximise your retirement income stream balance

This is a fantastic opportunity for those who have still got some way to go to meeting their Transfer Balance Cap of $1,600,000 by allowing them to add additional contributions that would otherwise not have been considered acceptable in the past.

It is vital you receive appropriate professional advice in relation to this important opportunity if you feel you could benefit from this important rule change.

Summary of the Downsizer opportunity

Here is a summary of the downsizer initiative;

  1. The downsizer initiative applies only to the sale of a home in Australia
  2. You (and your spouse) must have owned it for at least 10 years
  3. the home must be considered your main residence for at least part of that time
    1. As long as you qualify for at least a partial main residence exemption (or you would qualify for the exemption if a capital gain arose) you may be able to access the downsizer concession. This means that you do not actually need to have lived in the property for the 10 year period being tested. As an example, you could have rented out your property for up to 6 years using the Senate rule and still qualify for this Downsizer concession.
  4. these rules take into consideration a change of ownership in the past. Examples include;
    1. your spouse passed away prior to the sale of the property and you have inherited their interest in the property
    2. marriage or defacto relationship breakdown can also be accommodated in this context
  5. The contributions should be made within 90 days of the sale (date of settlement) of the home. The tax commissioner may extend this period but a formal request for same must be lodged
  6. This Downsizer concession may only be used once and cannot be used on future property sales.

Important Update (01/01/2023)

Please click here to view our most recent article applying to those over the age of 55 who wish to make a downsizer contribution

Would you like guidance and advice on this opportunity?

LifeTime Financial Group are specialist (holding appropriate accreditations) advisors who are ideally positioned to assist you.

Would you like to discuss your personal position further with one of our highly qualified financial planners? Why not call us today on 03 9596-7733. There is no cost or obligation for our initial conversation/meeting.

Written by Anthony Stedman of LifeTime Financial Group. A leading privately owned Melbourne based Financial Planning practice.

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