What do you need to know about making downsizer contributions into your super?
If you are 65 years of age or older, you can boost your retirement savings by contributing up to $300,000 into your super using money from the sale of your main residence. This is a tax-free contribution.
What are the benefits?
- It’s an easy way to increase your super balance
For those who feel like they do not have enough funds saved for their retirement, this tax-free contribution is a good option to increase your super. - You do not need work tests or age limits to apply for downsizer
To make voluntary super contributions, people aged 67 to 74 need to satisfy a work test where they need to have worked for 40 hours in total over a minimum of 30 consecutive days. However, this home downsizer contribution does not require a work test. - Annual contributions caps also do not apply
Downsizing contributions will not be counted towards any contribution cap. This means that annual concessional and non-concessional contributions caps, which are $25,000 and $100,000 a year are irrelevant. - Partners can take advantage of downsizer too
Both members of a couple can each contribute $300,000, which means a total of $600,000 per couple can be contributed towards their super fund.
What are the eligibility requirements?
- You must be 65 years old or older during the time you make a downsizer contribution.
- The contribution must be from the proceeds of selling your home, where the contract for sale of the property must be exchanged on or after 1 July 2018.
- Your house was owned by you or your spouse for 10 years or more prior to the sale - the period of ownership is usually from the date of settlement of purchase to the date of settlement of sale.
- You make the downsizer payment within 90 days of receiving proceeds from the house sale (date of settlement).
- You have given your super provider the Downsizer Contributions Into Super Form during before or at the time of making your downsizer contribution.
- You have never made a downsizer contribution to your super from the sale of another house.
- The home is not a houseboat, mobile home or caravan.
- The proceeds from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or the proceeds would be entitled to such an exemption if the home was a CGT rather than a pre-CGT (acquired before 20 September 1985) asset.
IMPORTANT NOTE: This information is general advice only and does not take into account your personal circumstances, goals and objectives. Therefore, you should consider its appropriateness for your circumstances before acting on this information.