THINKING of downsizing and putting some of the proceeds of the sale of your former home into superannuation?
Here’s what you should know.
The new measure, which came into force from July 1, allows people who are 65 and over to make a contribution of up to $300,000 (for an individual) or up to $600,000 (couple) into their superannuation from the proceeds of the sale.
The change has been made because under existing contribution rules there are limited opportunities and amount restrictions for individuals 65–74 years old to contribute into super.
Individuals 75 years and older are not able to contribute into super.
From 1 July 2018, eligible individuals 65 years and older (with no maximum age limit) will have the opportunity to contribute proceeds from the sale of their home into super.
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A new fact sheet from the Australian Taxation Office is a must for anyone considering taking advantage of the measure.
The downsizer contributions will not count towards your concessional or non-concessional superannuation contribution caps.
However, when your total super balance is recalculated at the end of the financial year, the downsizer contribution amount will count towards your total super balance.
Downsizers need to make their contribution within 90 days of the change of ownership, however in some circumstances you may be able to request a longer period.
The new measure does not apply to caravans, houseboats or other mobile homes.
You or your spouse must have held an ownership interest in the home for 10 consecutive years and your home must be exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to an exemption if the home was a CGT rather than a pre-CGT asset (acquired before 20 September 1985).
You should seek financial advice before entering into the arrangement, as the downsizing contributions will count as an asset for the age pension assets test.
Also check that your super fund will accept a downsizer contribution.