From 1 January 2023, the eligible age for downsizer super contributions has been lowered to 55 years of age, or older.
This means if you have reached the eligible age, you may be able to contribute up to an additional $300,000 to your super. How? By downsizing your home and contributing the proceeds of the sale (or part sale) of your home into your superannuation fund.
Due to the rising rent prices, and with Australia facing a housing crisis, lowering the eligible age allows for more homes to become available to young families looking to enter the housing market. Additionally, there are some other eligibility requirements, such as:
- The sale of any dwelling in Australia (other than a Caravan, Houseboat or Motorhome) can qualify the seller to make a downsizer contribution
- The home must be in Australia, and have been owned by you or your spouse for at least 10 years (the disposal must be exempt or partially exempt from Captain Gains Tax)
- Not have previously made a downsizer contribution to your super form the sale of another home or from the part sale of your home
- At the same time (or prior) as making your contribution, you must provide your fund with the ‘Downsizer Contributions into Super Form’
How much can I contribute?
The maximum you can contribute under the downsizer rule is $300,000 ($600,000 for a couple), from the sale of your eligible family home. The contribution limit is the lesser of $300,000 and the gross actual sale proceeds. You may make more than one contribution, but the total must not exceed the maximum amount.
To sweeten the deal, eligible downsizer contributions are exempt from many of the usual contribution caps.
How can I contribute?
You should talk to your fund about how to make a downsizer contribution. If you don’t have a superannuation account, you may open one to make your contribution.
When do I have to contribute by?
After the sale of your home settles, you’ll have 90 days to make the contribution. You may be able to seek an extension from the ATO.
Will this affect my Age Pension?
It could reduce, or even eliminate your entitlement to an Age Pension. You should seek financial advice to consider whether this might affect you.
For further information, speak to our Super Specialist, Debbie today.
