Downsizer Contributions: Maximise Your Superannuation

If you can answer yes to all the following:

• You have reached the eligible age at the time you make a downsizer contribution; the eligible age to make a downsizer contribution is as follows:

– From 1 January 2023, 55 years old or older

– From 1 July 2022, 60 years old or older.

– From 1 July 2018, 65 years old or older

Note: There is no maximum age limit.

• Your home was owned by you or your spouse for 10 years or more prior to the sale – the ownership period is generally calculated from the date of settlement of purchase to the date of settlement of sale. Your home is in Australia and is not a caravan, houseboat, or other mobile home.

• The proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT rather than a pre-CGT asset (acquired before 20 September 1985).

• You provide your super fund with the downsizer contribution into super form (NAT 75073) either before or at the time of making your downsizer contribution.

• You make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement.

• You have not previously made a downsizer contribution to your super from the sale of another home or from the part sale of your home.

Note: If your home was only owned by one spouse and was sold, the spouse that did not have an ownership interest may also make a downsizer contribution, or have one made on their behalf, provided they meet all of the other requirements.

Great incentive however you always need to look at your personal circumstances going towards retirement and beyond.

• Other things to consider is will it affect Age Pension entitlements.

• Eligibility for home or residential care.

• Income and assets tests

As always not everyone wants to consider selling their home to downsize , and costs for selling and buying including commissions, stamp duty, settlement costs all have to be considered .

Moving from a larger house to a smaller one may not equate to major excess in capital .

These are ideas that can be explored if you are thinking of the Downsizer Super Contributions  as a way to increase capital in your superannuation fund by our team at MKG Partners.