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Downsizer contributions are a great way to top up your superannuation balance without affecting the other superannuation limits for the year.
From 1 July 2018, if you are 65 years old or older and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.
You will be eligible to make a downsizer contribution to super if you can answer yes to all of the following:
You can make a downsizer contribution up to a maximum of $300,000 (each, if in a couple). The contribution amount can’t be greater than the total proceeds of the sale of your home.
You may make multiple downsizer contributions from the proceeds of a single sale.
However, the total of all your contributions must not exceed $300,000 or the total proceeds of the sale less any other downsizer contributions that have been made by your spouse.
As you can see, these things can be complex so please call our office for the right advice.
If you’re aged 65 or over and are looking to boost your retirement savings, you can make a tax-free contribution to your super of up to $300,000 using the proceeds from the sale of your main residence.
Usually, people aged 67 to 74 need to satisfy a work test (where you have to work 40 hours over a period of no more than 30 consecutive days) to make voluntary super contributions, while people aged 75 and over are generally ineligible to make any voluntary contributions to their super.
This restriction does not apply to downsizer contributions.
Annual concessional and non-concessional contributions caps, which are $25,000 and $100,000 a year respectively (bearing in mind there may be instances where you can also carry forward any unused amounts from previous years), don’t apply to downsizer contributions. In fact, downsizer contributions can be made in addition to any concessional and non-concessional super contributions you may be eligible to make.
If you sell your main residence and make a downsizer contribution into your super, you’re not required to buy a new home with money you might make on the sale.
No, but generally sale of your principal place of residence is tax free anyway.
Your main residence is generally exempt from the assets and income tests used to determine eligibility for the Age Pension and DVA benefits, but super is generally not exempt, so it’s important to consider this before downsizing.
Downsizing contributions are counted for the assets and income tests, so you will be moving money out of an exempt asset (your family home) into the non-exempt and assessable environment of your super account.
You can only make contributions using the proceeds from the sale of one home. You cannot access it again for the sale of a second home.