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Downsizing your family home? Here's what you need to know.

Financial Planning  |  19/04/2018  |   5 min read

Thinking of making that sea change or downsizing the family home? You and your superannuation might be better off waiting until after 1 July 2018. That's when the new 'downsizer contribution' rules come into play.

If you’re 65 or older and you sell your family home, the new rules allow you to contribute up to $300,000 (per person) towards your superannuation. This applies even if your super balance exceeds the A$1.6 million cap.

These new rules are designed to help baby boomers downsize and free up the equity in their homes, while at the same time increasing the supply of larger homes for growing families. 

How it works

The downsizer contribution changes are intended for the family home, which means you must have owned the property for at least 10 years and used it as your primary place of residence. 

More specifically, you'll need to adhere to the following rules.

  • Be aged 65 or over
  • Sign the contract of sale for your property on or after 1 July 2018
  • The contribution amount permitted into your super will be the lesser of the proceeds of sale or $300,000
  • If you’re a couple selling your property, both of you can contribute into your super. For some this means up to $600,000 as a couple
  • You must notify your super fund trustee in advance if you’re making a downsizer contribution so that it is entered as exempt from the non-concessional contributions cap
  • You cannot claim a personal tax deduction for a downsizer contribution

If you are making other non-concessional contributions into your super, you should discuss your approach with a professional financial planner, as there are a number of important issues to consider - including eligibility for the government Age pension. 

The downsizer contribution rule is still a little time away, but if you're consider selling it's worth keeping the changes in mind. In the meantime you may want to consult a financial planner about your options.
 

Learn more about your retirement options and if downsizing is right for you by speaking with an Equip financial planner. Learn more here.

 

This information is provided for general information only. It does not take into account your personal objectives, financial situation or needs and should therefore not be taken as personal advice. You should consider whether it is appropriate for you before acting on it and, if necessary, you should seek professional financial advice. Issued by Equipsuper Pty Ltd ABN 64 006 964 049 AFSL 246383.  MySuper Authorisation Numbers 33813823017672 and 33813823017518  (‘Equip’, ‘the Fund’ and ‘the Equip Rio Tinto Fund’).

Equipsuper Financial Planning Pty Ltd (“EFP”) (ABN 84 124 491 078, AFSL 455010) is licensed to provide financial planning services to retail and wholesale clients. EFP is owned by Equipsuper Financial Holdings Pty Ltd (ABN 11 604 515 791). You can obtain the EFP Financial Services Guide and/or Privacy Statement by contacting our Helpline 1800 682 626.

 

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