Selling your home and contributing to super – the “Downsizer” concession

Older Australians downsizing from their family homes have contributed $1 billion to their superannuation funds, building up retirement incomes and freeing up housing for younger families, Minister for Housing and Assistant Treasurer, Michael Sukkar announced on 28 June 19.

Key recent data shows:

  1. 4,246 individuals have utilised the Downsizer measure;
  2. 55% of contributions have been made by females and 45% from males;
  3. Individuals from every state and territory have made Downsizer contribution with the top three states being, NSW (31%), VIC (26%) and QLD (24%).

The Downsizer Measure was one of several announced in the 2017/18 Budget as part of the Coalition Government’s package of reforms to reduce pressure on housing affordability in Australia.

The Measure which commenced on 1 July 2018, allows older Australians choosing to sell their home and downsize or move from homes that no longer meet their needs, to contribute the proceeds from the sale of their home into superannuation up to $300,000.

Persons aged 65 years and over may make contributions to superannuation of up to $300,000 per person from the proceeds of the sale of their ownership interest in an Australian home without having to meet the work test.  The contribution will not count against the non-concessional limit and will not be restricted by the person’s total superannuation balance. This type of contribution can be made even after attaining age 75. A tax deduction cannot be claimed for the contribution and it will be a tax-free component of the person’s superannuation interest.  The person must have owned the property for at least 10 years and make the contribution within 90 days of the transfer of ownership.  This can only be done once.  The downsizer contribution will count towards your transfer balance cap, currently set at $1.6 million. This cap applies when you move your super savings into retirement phase.  The house must have qualified (or would have qualified) for the main residence CGT exemption in whole or part. It cannot be an investment property, has to be the principle place of residence.

Contact Experien Financial Services here if you would like to understand more about Downsizer Contributions.

More information on the Downsizer Measure can be found at the Australian Taxation Office website.

This information is general in nature and should not be relied on for your personal financial planning needs. You should seek personal financial advice of your own.