Maximise your super, downsize your house
The kids are long gone and have left the family home. Yet you’re still living in a four bedroom house. As your retirement dream gets closer to reality, you might be considering packing up, buying a caravan and travelling around Australia. Or you might just be thinking about selling the family home and downsizing into a smaller home. Whatever your plans are, the latest Government initiative might help you afford that escape sooner rather than later.
On 1 July 2018, the Government will introduce the Downsizing Contributions measure where those aged 65 years or older can contribute up to $300,000 from the proceeds of selling their home into their super account.
How does it work?
If you are 65 years or older, have a family home that has been owned by you or your spouse for at least 10 years, the home has been your main residence for any part of that time, and you plan on selling that house, you can contribute up to $300,000 each from the sale of the house into your super accounts.
The Downsizing Contribution does not count towards your contribution caps, and you don’t need to meet the work test requirements in order to make the contributions.
What is considered a ‘home’?
Any house, town-house, apartment or other such land dwelling that is in Australia qualifies for Downsizing Contributions. This means caravans, houseboats or mobile homes (e.g. a motor home) do not qualify.
What if I’ve already sold my home and the money is sitting in my bank?
The Downsizing Contributions legislation comes into effect on 1 July 2018. This means the contract for sale must be exchanged after 1 July 2018.
Will this affect my age pension eligibility?
When determining eligibility for the age pension, the Government looks at all non-exempt assets. This includes your superannuation. As the Downsizing Contribution needs to be put into a super account, this means it may affect your eligibility.
Is this right for me?
If you are interested in taking advantage of the downsizing measure come 1 July 2018, AustSafe Super’s Financial Planner1 is available to help you with a range of financial matters, including how this measure might suit you and your individual circumstances. Call 1300 131 293 for low cost, tailored solutions to suit you.
You can also read more about the measure on the Australian Taxation Office (ATO) website.
Source: Australian Taxation Office. Downsizing contributions into superannuation (2018). www.ato.gov.au/downsizing.
1Austsafe Pty Ltd ABN 96 010 528 597 AFSL 314183 RSE License L0002035 has engaged Industry Fund Services Limited (IFS) ABN 54 007 016 195 AFSL No 232514 to facilitate the provision of financial advice to members of AustSafe Super. Advice is provided by one of our financial planners who are Representatives of IFS. Fees may apply. Further information about cost of advice is set out in the relevant Financial Services Guide, a copy of which is available at austafe.com.au or by calling 1300 131 293. IFS is responsible for any advice given to you by its Representatives. Any reference made to an AustSafe Super Financial Planner refers to the IFS service.
This editorial is general information only and does not take into account your individual objectives, financial situation or needs. You may also wish to seek the advice of a qualified financial planner. Please also read the relevant AustSafe Super Product Disclosure Statement (PDS) before making a decision in relation to the product available at austsafe.com.au which summarises important information about being a member of AustSafe Super.
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