As you near retirement, you may be considering what to do with the family home and if there are ways you can boost your superannuation savings. Downsizer super contributions may present an opportunity for you to divert savings into your super fund.

Even if you are upsizing or not buying another home at all, you may still be eligible to make downsizer super contributions. Check if you are eligible:

  • you are at least 65 years old at the time of making a downsizer contribution
  • the amount contributed is equal to or less than the capital proceeds from selling the home, up to a maximum of $300,000 per eligible person
  • the home was owned by you, your spouse, or former spouse for 10 years or more prior to the sale
  • the home is in Australia and is not a caravan, houseboat or other mobile home
  • the sale of the home is either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT rather than a preCGT asset
  • the downsizer contribution into super form is provided to the super fund either before or at the time of making the contribution
  • the downsizer contribution is made within 90 days of receiving the proceeds of sale
  • you have not already made a downsizer super contribution from the sale of another home.

There are a few important considerations you need to keep in mind before you decide to make a downsizer super contribution:

  • the work test does not apply
  • contributions do not count against the nonconcessional contribution cap
  • a tax deduction cannot be claimed
  • there is no requirement to buy another home
  • contributions can still be made where your total super balance exceeds $1.6 million
  • contributions will be counted towards your next 30 June total super balance
  • where a surviving spouse inherits the home, the surviving spouse counts the ownership period of the deceased spouse and the period held by the trustee of the deceased estate for the 10 year ownership test
  • where a dwelling is built on a vacant block of land, downsizer super contributions may apply to a subsequent disposal providing the land was owned for at least 10 years and at least a part main residence CGT exemption applies
  • if you have a rental property that was once your main residence, the disposal of the property must be partially or fully exempt from CGT to be eligible
  • where a spouse dies, Centrelink payments may be reduced, or lost entirely.

Whilst more information is available on the ATO website, every situation is different so if you are considering ways to boost your super, have a conversation with a financial adviser who can talk to you about your individual circumstances and the options available

October 11, 2019

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