From 1 January this year, those 55 and over have been able to make a ‘downsizer’ contribution to their superannuation.
Since the age limit for downsizer contributions was reduced from 60 to 55, more people have been able to use this opportunity to get money into their super quickly, if it suits them.
The name ‘downsizer’ is a bit misleading. You do not have to buy another home once you have sold your existing home, or buy a smaller home. You could buy a larger, more expensive home and still access this measure.
A downsizer contribution is a payment into your super from the proceeds of the sale of your home, up to $300,000. These contributions are excluded from the existing age test and the transfer balance threshold.
For couples, both individuals can take advantage of this opportunity for the same home if you meet the criteria. That means you have the possibility of being able to contribute up to $600,000 per couple, even if one person did not have an ownership interest in the property.
Sale proceeds put into superannuation under this measure count toward the Age Pension assets test. This downsizer contribution can only be made once in a lifetime, so it is important to ensure it is the right option.
You are eligible if:
- You are 55 years or older at the time of making the contribution.
- The home was owned by you or your spouse for 10 years or more prior to the sale.
- The home is in Australia, and is not a caravan, houseboat or mobile home.
- The proceeds from the sale are exempt or partially exempt from capital gains tax under the main residence exemption if the home was a post-capital gains tax asset rather than a pre-capital gains asset.
- You provide your super fund with the downsizer contribution into super form either before or at the time of making the contribution.
- The contribution was made within 90 days of receiving the proceeds of the sale.
- You have not previously made a downsizer contribution to super from the sale of another home or part sale of your home.